Arsenic (As) exposure adversely affects neurodevelopment in children. Accumulation of misfolded proteins in cells exposed to As leads to endoplasmic reticulum (ER) stress response, which, if not relieved, results in cell death. Despite the potential role of ER stress for As-induced neurotoxicity, the underlying mechanisms remain poorly understood. Here we aimed to investigate the roles of microRNA(miR)-124, a novel ER stress suppressor, in As-induced ER stress response and cytotoxicity in neural cells. We further aimed to link these in vitro findings to neurodevelopmental outcomes in children who were exposed to As. Using Quantitative RT-PCR and Cyquant assay, we showed that miR-124 protects against As-induced cytotoxicity in neural cells with concomitant suppression of As-induced ER stress. In addition, As-induced cytotoxicity was exacerbated in miR-124 knockout cells generated by CRISPR-based gene editing compared scramble control. Furthermore, we identified two miR-124 SNPs rs67543816 (p = 0.0003) and rs35418153 (p = 0.0004) that are significantly associated with a mental composite score calculated from the Bayley Scales of Infant Development III in Bangladesh children. Our study reveals As-induced ER stress as a crucial mechanism underlying the toxic effects of As on neural cell function and neurodevelopment and identifies miR-124 as a potential preventative and therapeutic target against detrimental effects of As exposure in children.