In many species, the Sox2 transcription factor is a marker of the nervous system from the beginning of its development, and we have previously shown that Sox2 is expressed in embryonic neural stem cells. It is also expressed in, and is essential for, totipotent inner cell mass stem cells and other multipotent cell lineages, and its ablation causes early embryonic lethality. To investigate the role of Sox2 in the nervous system, we generated different mouse mutant alleles: a null allele(Sox2^β-geo `knock-in'), and a regulatory mutant allele (Sox2^ΔENH), in which a neural cell-specific enhancer is deleted. Sox2 is expressed in embryonic early neural precursors of the ventricular zone and, in the adult, in ependyma (a descendant of the ventricular zone). It is also expressed in the vast majority of dividing precursors in the neurogenic regions, and in a small proportion of differentiated neurones, particularly in the thalamus, striatum and septum. Compound Sox2^β-geo/ΔENH heterozygotes show important cerebral malformations, with parenchymal loss and ventricle enlargement, and L-dopa-rescuable circling behaviour and epilepsy. We observed striking abnormalities in neurones; degeneration and cytoplasmic protein aggregates, a feature common to diverse human neurodegenerative diseases, are observed in thalamus, striatum and septum. Furthermore, ependymal cells show ciliary loss and pathological lipid inclusions. Finally, precursor cell proliferation and the generation of new neurones in adult neurogenic regions are greatly decreased, and GFAP/nestin-positive hippocampal cells, which include the earliest neurogenic precursors, are strikingly diminished. These findings highlight a crucial and unexpected role for Sox2 in the maintenance of neurones in selected brain areas, and suggest a contribution of neural cell proliferative defects to the pathological phenotype.