Olig2 is a basic helix-loop-helix transcription factor essential for oligodendrocyte and motoneuron development in the spinal cord. Olig2-positive (Olig2+) cells in the ventricular zone of the ventral telencephalon have been shown to differentiate into GABAergic and cholinergic neurons. However, the fate of Olig2 lineage cells in the postnatal forebrain has not been fully described and Olig2 may regulate the development of both astrocytes and oligodendrocytes. Here, we examined the fate of embryonic Olig2+ progenitors using a tamoxifen-inducible Cre/loxP system. Using long-term lineage tracing, Olig2+ cells in the early fetal stage primarily differentiated into GABAergic neurons in the adult telencephalon, while those in later stages gave rise to macroglial cells, both astrocytes and oligodendrocytes. Olig2+ progenitors in the diencephalon developed into oligodendrocytes, as observed in the spinal cord, and a fraction developed into glutamatergic neurons. Olig2 lineage oligodendrocytes tended to form clusters, probably due to local proliferation at the site of terminal differentiation. In spite of the abundance of Olig2 lineage GABAergic neurons in the normal neocortex, GABAergic neurons seemed to develop at normal density in the Olig2 deficient mouse. Thus, Olig2 is dispensable for GABAergic neuron specification. In contrast, at the late fetal stage in the Olig2 deficient mouse, astrocyte development was retarded in the dorsal neocortex, but not in the basal forebrain. Olig2 functions, therefore, in gliogenesis in the dorsal pallium. Short-term lineage tracing experiments revealed that the majority of late Olig2+ cells were not direct descendants of early Olig2+ progenitors in the fetal forebrain. These observations indicate that embryonic Olig2+ progenitor cells change their differentiative properties during development, and also that Olig2 plays a role in astrocyte development in a region-specific manner.