The molecular mechanisms that determine glial cell fate in the vertebrate n
ervous system have not been elucidated. Peripheral glial cells differentiat
e from pluripotent neural crest cells. We show here that the transcription
factor Sox10 is a key regulator in differentiation of peripheral glial cell
s. In mice that carry a spontaneous or a targeted mutation of Sox10, neuron
al cells form in dorsal root ganglia, but Schwann cells or satellite cells
are not generated. At later developmental stages, this lack of peripheral g
lial cells results in a severe degeneration of sensory and motor neurons. M
oreover, we show that Sox10 controls expression of ErbB3 in neural crest ce
lls. ErbB3 encodes a Neuregulin receptor, and down-regulation of ErbB3 acco
unts for many changes in development of neural crest cells observed in Sox1
0 mutant mice. Sox10 also has functions not mediated by ErbB3, for instance
in the melanocyte lineage. Phenotypes observed in heterozygous mice that c
arry a targeted Sox10 null allele reproduce those observed in heterozygous
Sox10(Dom) mice. Haploinsufficiency of Sox10 can thus cause pigmentation an
d megacolon defects, which are also observed in Sox10(Dom)/+ mice and in pa
tients with Waardenburg-Hirschsprung disease caused by heterozygous SOX10 m
utations.