Sensory information from the periphery is integrated and transduced by excitatory and inhibitory interneurons in the dorsal spinal cord. Recent studies have identified a number of postmitotic factors that control the generation of these sensory interneurons. We show that Gsh1/2 and Ascl1 (Mash1), which are expressed in sensory interneuron progenitors, control the choice between excitatory and inhibitory cell fates in the developing mouse spinal cord. During the early phase of neurogenesis, Gsh1/2 and Ascl1 coordinately regulate the expression of Tlx3, which is a critical postmitotic determinant for dorsal glutamatergic sensory interneurons. However, at later developmental times, Ascl1 controls the expression of Ptf1a in dIL(A) progenitors to promote inhibitory neuron differentiation while at the same time upregulating Notch signaling to ensure the proper generation of dIL(B) excitatory neurons. We propose that this switch in Ascl1 function enables the cogeneration of inhibitory and excitatory sensory interneurons from a common pool of dorsal progenitors.