Redox homeostasis regulates key cellular signaling in both physiology and pathology. While perturbations result in shifting the redox homeostasis towards oxidative stress are well documented, the influence of reductive stress (RS) in neurodegenerative diseases and its mechanisms are unknown. Here, we postulate that a redox shift towards the reductive arm (through the activation of Nrf2 signaling) will damage neurons and impair neurogenesis. In proliferating and differentiating neuroblastoma (Neuro 2a/N2a) cells, sulforaphane-mediated Nrf2 activation resulted in increased transcription/translation of antioxidants and glutathione (GSH) production along with significantly declined ROS in a dose-dependent manner leading to a reductive-redox state (i.e. RS). Interestingly, this resulted in endoplasmic reticulum (ER) stress leading to subsequent protein aggregation/proteotoxicity in neuroblastoma cells. Under RS, we also observed elevated Tau/α-synuclein and their co-localization with other protein aggregates in these cells. Surprisingly, we noticed that acute RS impaired neurogenesis as evidenced from reduced neurite outgrowth/length. Furthermore, maintaining the cells in a sustained RS condition (for five consecutive generations) dramatically reduced their differentiation and prevented the formation of axons (p < 0.05). This impairment in RS mediated neurogenesis occurs through the alteration of Tau dynamics i.e. RS activates the pathogenic GSK3β/Tau cascade thereby promoting the phosphorylation of Tau leading to proteotoxicity. Of note, intermittent withdrawal of sulforaphane from these cells suppressed the proteotoxic insult and re-activated the differentiation process. Overall, this results suggest that either acute or chronic RS could hamper neurogenesis through GSK3β/TAU signaling and proteotoxicity. Therefore, investigations identifying novel redox mechanisms impacting proteostasis are crucial to preserve neuronal health.