The mammalian telencephalon, which comprises the cerebral cortex, olfactory bulb, hippocampus, basal ganglia, and amygdala, is the most complex and intricate region of the CNS. It is the seat of all higher brain functions including the storage and retrieval of memories, the integration and processing of sensory and motor information, and the regulation of emotion and drive states. In higher mammals such as humans, the telencephalon also governs our creative impulses, ability to make rational decisions, and plan for the future. Despite its massive complexity, exciting work from a number of groups has begun to unravel the developmental mechanisms for the generation of the diverse neural cell types that form the circuitry of the mature telencephalon. Here, we review our current understanding of four aspects of neural development. We first begin by providing a general overview of the broad developmental mechanisms underlying the generation of neuronal and glial cell diversity in the telencephalon during embryonic development. We then focus on development of the cerebral cortex, the most complex and evolved region of the brain. We review the current state of understanding of progenitor cell diversity within the cortical ventricular zone and then describe how lateral signaling via the Notch-Delta pathway generates specific aspects of neural cell diversity in cortical progenitor pools. Finally, we review the signaling mechanisms required for development, and response to injury, of a specialized group of cortical stem cells, the radial glia, which act both as precursors and as migratory scaffolds for newly generated neurons.