The oligodendrocyte lineage genes Olig1 and Olig2 encode related bHLH proteins that are coexpressed in neural progenitors. Targeted disruption of these two genes sheds light on the ontogeny of oligodendroglia and genetic requirements for their development from multipotent CNS progenitors. Olig2 is required for oligodendrocyte and motor neuron specification in the spinal cord. Olig1 has roles in development and maturation of oligodendrocytes, evident especially within the brain. Both Olig genes contribute to neural pattern formation. Neither Olig gene is required for astrocytes. These findings, together with fate mapping analysis of Olig-expressing cells, indicate that oligodendrocytes are derived from Olig-specified progenitors that give rise also to neurons.