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RNA splicing is highly prevalent in the brain and has strong links to neuropsychiatric disorders; yet, the role of cell type–specific splicing and transcript-isoform diversity during human brain development has not been systematically investigated. In this work, we leveraged single-molecule long-read sequencing to deeply profile the full-length transcriptome of the germinal zone and cortical plate regions of the developing human neocortex at tissue and single-cell resolution. We identified 214,516 distinct isoforms, of which 72.6% were novel (not previously annotated in Gencode version 33), and uncovered a substantial contribution of transcript-isoform diversity—regulated by RNA binding proteins—in defining cellular identity in the developing neocortex. We leveraged this comprehensive isoform-centric gene annotation to reprioritize thousands of rare de novo risk variants and elucidate genetic risk mechanisms for neuropsychiatric disorders.