In the adult central nervous system, two distinct populations of glial cells expressing the chondroitin sulfate proteoglycan NG2 have been described: bipolar progenitor cells and more differentiated "synantocytes." These cells have diverse neurological functions, including critical roles in synaptic transmission, repair, and regeneration. Despite their potential importance, the genetic factors that regulate NG2 cell development are poorly understood, and the relationship of synantocytes to the oligodendroglial lineage, in particular, remains controversial. Here, we show that >90% of embryonic and adult NG2 cells express Olig2, a basic helix-loop-helix transcription factor required for oligodendrocyte lineage specification. Analysis of mice lacking Olig function demonstrates a failure of NG2 cell development at embryonic and perinatal stages that can be rescued by addition of a transgene containing the human OLIG2 locus. These findings show a general requirement for Olig function in NG2 cell development and highlight further roles for Olig transcription factors in neural progenitor cells.