RNA splicing is highly prevalent in the brain and has strong links to neuropsychiatric disorders, yet the role of cell-type-specific splicing or transcript-isoform diversity during human brain development has not been systematically investigated. Here, we leveraged single-molecule long-read sequencing to deeply profile the full-length transcriptome of the germinal zone (GZ) and cortical plate (CP) regions of the developing human neocortex at tissue and single-cell resolution. We identified 214,516 unique isoforms, of which 72.6% are novel (unannotated in Gencode-v33), 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 re-prioritize thousands of rare de novo risk variants and elucidate genetic risk mechanisms for neuropsychiatric disorders.