The general view of development consists of the acquisition of committed/differentiated phenotypes following a period of self-renewal and progenitor expansion. Lineage specification and progression are phenomena of antagonistic events, silencing tissue-specific gene expression in precursors to allow self-renewal and multipotentiality, and subsequently suppressing proliferation and embryonic gene expression to promote the restricted expression of tissue-specific genes during maturation. The high mobility group-containing Sox family of transcription factors constitutes one of the earliest classes of genes to be expressed during embryonic development. These proteins not only are indispensable for progenitor cell specification but also are critical for terminal differentiation of multiple cell types in a wide variety of lineages. Sox transcription factors are now known to induce or repress progenitor cell characteristics and cell proliferation or to activate the expression of tissue-specific genes. Sox proteins fulfill their diverse functions in developmental regulation by distinct molecular mechanisms. Not surprisingly, in addition to DNA binding and bending, Sox transcription factors also interact with different protein partners to function as coactivators or corepressors of downstream target genes. Here we seek to provide an overview of the current knowledge of Sox gene functional mechanisms, in an effort to understand their roles in both development and pathology.