Sox proteins are characterized by possession of a DNA-binding domain with similarity to the high-mobility group domain of the sex determining factor SRY. Here, we report on Sox10, a novel protein with predominant expression in glial cells of the nervous system. During development Sox10 first appeared in the forming neural crest and continued to be expressed as these cells contributed to the forming PNS and finally differentiated into Schwann cells. In the CNS, Sox10 transcripts were originally confined to glial precursors and later detected in oligodendrocytes of the adult brain. Functional studies failed to reveal autonomous transcriptional activity for Sox10. Instead, Sox10 functioned synergistically with the POU domain protein Tst-1/Oct6/SCIP with which it is coexpressed during certain stages of Schwann cell development. Synergy depended on binding to adjacent sites in target promoters, was mediated by the N-terminal regions of both proteins, and could not be observed between Sox10 and several other POU domain proteins. Interestingly, Sox10 also modulated the function of Pax3 and Krox-20, two other transcription factors involved in Schwann cell development. We propose a role for Sox10 in conferring cell specificity to the function of other transcription factors in developing and mature glia.