One of the most challenging issues in developmental biology is to understand how cell diversity is generated. The Drosophila nervous system provides a model of choice for unraveling this process. First, many neural stem cells and lineages have been identified. Second, major molecular pathways involved in neural development and associated mutations have been characterized extensively in recent years. In this review, we focus on the cellular and molecular mechanisms underlying the generation of glia. This cell population relies on the expression of gcm fate determinant, which is necessary and sufficient to induce glial differentiation. We also discuss the recently identified role of gcm genes in Drosophila melanogaster and vertebrate neurogenesis. Finally, we will consider the Gcm pathway in the context of neural stem cell differentiation.