The mammalian CNS contains a ubiquitous population of glial progenitors known as NG2⁺ cells that have the ability to develop into oligodendrocytes and undergo dramatic changes in response to injury and demyelination. Although it has been reported that NG2⁺ cells are multipotent, their fate in health and disease remains controversial. Here, we generated PDGFαR-CreER transgenic mice and followed their fate in vivo in the developing and adult CNS. These studies revealed that NG2⁺ cells in the postnatal CNS generate myelinating oligodendrocytes, but not astrocytes or neurons. In regions of neurodegeneration in the spinal cord of ALS mice, NG2⁺ cells exhibited enhanced proliferation and accelerated differentiation into oligodendrocytes but remained committed to the oligodendrocyte lineage. These results indicate that NG2⁺ cells in the normal CNS are oligodendrocyte precursors with restricted lineage potential and that cell loss and gliosis are not sufficient to alter the lineage potential of these progenitors.