Endosomal sorting complex required for transport (ESCRT) complex proteins regulate biogenesis and release of extracellular vesicles (EVs), which enable cell-to-cell communication in the nervous system essential for development and adult function. We recently showed human loss-of-function (LOF) mutations in ESCRT-III member CHMP1A cause autosomal recessive microcephaly with pontocerebellar hypoplasia, but its mechanism was unclear. Here, we show Chmp1a is required for progenitor proliferation in mouse cortex and cerebellum and progenitor maintenance in human cerebral organoids. In Chmp1a null mice, this defect is associated with impaired sonic hedgehog (Shh) secretion and intraluminal vesicle (ILV) formation in multivesicular bodies (MVBs). Furthermore, we show CHMP1A is important for release of an EV subtype that contains AXL, RAB18, and TMED10 (ART) and SHH. Our findings show CHMP1A loss impairs secretion of SHH on ART-EVs, providing molecular mechanistic insights into the role of ESCRT proteins and EVs in the brain