Cortical progenitor cells give rise to neurons during embryonic development and to glia after birth. While lineage studies indicate that multipotent progenitor cells are capable of generating both neurons and glia, the role of extracellular signals in regulating the sequential differentiation of these cells is poorly understood. To investigate how factors in the developing cortex might influence cell fate, we developed a cortical slice overlay assay in which cortical progenitor cells are cultured over cortical slices from different developmental stages. We find that embryonic cortical progenitors cultured over embryonic cortical slices differentiate into neurons and those cultured over postnatal cortical slices differentiate into glia, suggesting that the fate of embryonic progenitors can be influenced by developmentally regulated signals. In contrast, postnatal progenitor cells differentiate into glial cells when cultured over either embryonic or postnatal cortical slices. Clonal analysis indicates that the postnatal cortex produces a diffusible factor that induces progenitor cells to adopt glial fates at the expense of neuronal fates. The effects of the postnatal cortical signals on glial cell differentiation are mimicked by FGF2 and CNTF, which induce glial fate specification and terminal glial differentiation respectively. These observations indicate that cell fate specification and terminal differentiation can be independently regulated and suggest that the sequential generation of neurons and glia in the cortex is regulated by a developmental increase in gliogenic signals.