The major cell types in the central nervous system, neurons and glial cells (astrocytes and oligodendrocytes), are generated from common neural stem cells (NSCs). However, neurogenesis precedes gliogenesis, which normally commences at later stages of fetal brain development. Recent studies have shown that epigenetic gene regulation, in concert with cues from outside the cells, plays important roles in regulating the differentiation potential and fate specification of NSCs. In this review, we discuss emerging molecular explanations for the transitions that occur during the stepwise process of NSC fate specification.