Recent studies have identified stem cells in brain cancer. However, their relationship to normal CNS progenitors, including dependence on common lineage-restricted pathways, is unclear. We observe expression of the CNS-restricted transcription factor, OLIG2, in human glioma stem and progenitor cells reminiscent of type C transit-amplifying cells in germinal zones of the adult brain. Olig2 function is required for proliferation of neural progenitors and for glioma formation in a genetically relevant murine model. Moreover, we show p21^WAF1/CIP1, a tumor suppressor and inhibitor of stem cell proliferation, is directly repressed by OLIG2 in neural progenitors and gliomas. Our findings identify an Olig2-regulated lineage-restricted pathway critical for proliferation of normal and tumorigenic CNS stem cells.