During fetal and postnatal development, the human brain generates 160 billion neuronal and glial cells, each with precise cellular phenotypes. To effectively manage such a complicated task, intrinsic (e.g., transcription factors) and extrinsic (environmental signals) cues cooperate to regulate the decision by neural progenitors to continue to proliferate or to differentiate. Loss- and gain-of-function studies in the mouse brain have been instrumental in identifying these cues, leading to a fairly well-developed and well-integrated model of neocortical development. This research has revealed that the neurons, astrocytes, and oligodendrocytes that populate the mature neocortex are generated sequentially from neural progenitor pools in both the dorsal (pallial) and ventral (subpallial) telencephalon. Understanding how cellular diversity is established during neocortical development is critical, as appropriate numbers of inhibitory and excitatory neurons, oligodendrocytes, and astrocytes are required for normal neural function. Indeed, an imbalance in excitatory vs inhibitory neurotransmission or alterations in glial cell number are hallmark features of neuropsychological and intellectual disorders such as schizophrenia, bipolar disorder, and autism. Moreover, these fundamental studies are beginning to pave the way for the rational design of neural cell reprogramming strategies, which are of value for the assessment of disease etiology, and for the possible development of novel cell-based therapies. We review herein our current understanding of the intrinsic cues and environmental signals that govern cell fate specification and differentiation decisions during development of neuronal and glial lineages in the murine neocortex.