A fundamental feature of central nervous system development is that neurons are generated before glia. In the embryonic spinal cord, for example, a group of neuroepithelial stem cells (NSCs) generates motor neurons (MNs), before switching abruptly to oligodendrocyte precursors (OLPs). We asked how transcription factor OLIG2 participates in this MN-OLP fate switch. We found that Serine 147 in the helix-loop-helix domain of OLIG2 was phosphorylated during MN production and dephosphorylated at the onset of OLP genesis. Mutating Serine 147 to Alanine (S147A) abolished MN production without preventing OLP production in transgenic mice, chicks, or cultured P19 cells. We conclude that S147 phosphorylation, possibly by protein kinase A, is required for MN but not OLP genesis and propose that dephosphorylation triggers the MN-OLP switch. Wild-type OLIG2 forms stable homodimers, whereas mutant (unphosphorylated) OLIG2(S147A) prefers to form heterodimers with Neurogenin 2 or other bHLH partners, suggesting a molecular basis for the switch.