The mammalian neocortex is established from neural stem and progenitor cells that utilize specific transcriptional and environmental factors to create functional neurons and astrocytes. Here, we examined the mechanism of Sox2 action during neocortical neurogenesis and gliogenesis. We established a robust Sox2 expression in neural stem and progenitor cells within the ventricular zone, which persisted until the cells exited the cell cycle. Overexpression of constitutively active Sox2 in neural progenitors resulted in upregulation of Notch1, recombination signal-sequence binding protein-J (RBP-J) and hairy enhancer of split 5 (Hes5) transcripts and the Sox2 high mobility group (HMG) domain seemed sufficient to confer these effects. While Sox2 overexpression permitted the differentiation of progenitors into astroglia, it inhibited neurogenesis, unless the Notch pathway was blocked. Moreover, neuronal precursors engaged a serine protease(s) to eliminate the overexpressed Sox2 protein and relieve the repression of neurogenesis. Glial precursors and differentiated astrocytes, on the other hand, maintained Sox2 expression until they reached a quiescent state. Sox2 expression was re-activated by signals that triggered astrocytic proliferation (i.e., injury, mitogenic and gliogenic factors). Taken together, Sox2 appears to act upstream of the Notch signaling pathway to maintain the cell proliferative potential and to ensure the generation of sufficient cell numbers and phenotypes in the developing neocortex.