The generation of neurons constitutes the foundation of nervous system development, yet the mechanisms underlying neurogenesis are not well established. The HMG-box transcription factors Sox1, Sox2 and Sox3 (Sox1-3) have previously been shown to suppress neurogenesis by maintaining neural cells in an undifferentiated state. Here we report that another HMG-box protein, Sox21, has the opposite activity and promotes neuronal differentiation. Using genetic studies in the chick embryo, we found that Sox21 mediates this function by counteracting the activity of Sox1-3. Accordingly, the balance of Sox21 and Sox1-3 activities determines whether neural cells remain as progenitors or commit to differentiation. Proneural basic helix-loop-helix proteins are essential for the establishment of neuronal fates. We now show that proneural proteins promote neurogenesis by upregulating Sox21 expression. These data establish a key role for Sox21 in the progression of neuronal differentiation and indicate that an important role of proneural proteins is their capacity to upregulate the expression of Sox21.