Oligodendrocyte progenitor cells express platelet-derived growth factor (PDGF) receptor-alpha and, when expanded in PDGF only, have been shown to generate oligodendrocytes and astrocytes but never neurons. Recent evidence suggests that oligodendrocytes are generated by a common progenitor that also generates neurons but not astrocytes. We used the neurosphere culture system to isolate embryonic ventral forebrain, PDGF-responsive precursors (PRPs). We report that the medial ganglionic eminence is the source of PRP-generated neurospheres and that the progeny can differentiate into parvalbumin-positive interneurons, oligodendrocytes, and astrocytes. Thyroid hormone and bone morphogenetic protein-2 (BMP-2) promote the mutually exclusive differentiation of oligodendrocytes and neurons, respectively, whereas ciliary neurotrophic factor acts with BMP-2 to suppress OLIG2 expression and promote astroglial differentiation. PRPs require fibroblast growth factor-2 together with PDGF to maintain self-renewal, which is dependent on sonic hedgehog signaling. We present evidence for forebrain oligodendrocytes and parvalbumin-positive interneurons being generated by a common precursor and elucidate signals regulating the multiple differentiation routes of the progeny of this precursor.