SOX4 has been shown to promote neuronal differentiation both in the adult and embryonic neural progenitors. Ectopic SOX4 expression has also been shown to inhibit oligodendrocyte differentiation in mice, however the underlying molecular mechanisms remain poorly understood. Here we demonstrate that SOX4 regulates transcriptional targets associated with neural development in neural stem cells (NSCs), reducing the expression of genes promoting oligodendrocyte differentiation. Interestingly, we observe that SOX4 levels decreased during oligodendrocyte differentiation in vitro. Moreover, we show that SOX4 knockdown induces increased oligodendrocyte differentiation, as the percentage of Olig2- positive/2',3'-Cyclic-nucleotide 3'-phosphodiesterase (CNPase)-positive maturing oligodendrocytes increases, while the number of Olig2-positive oligodendrocyte precursors is unaffected. Conversely, conditional SOX4 overexpression utilizing a doxycycline inducible system decreases the percentage of maturing oligodendrocytes, suggesting that SOX4 inhibits maturation from precursor to mature oligodendrocyte. We identify the transcription factor Hes5 as a direct SOX4 target gene and we show that conditional overexpression of Hes5 rescues the increased oligodendrocyte differentiation mediated by SOX4 depletion in NSCs. Taken together, these observations support a novel role for SOX4 in NSC by controlling oligodendrocyte differentiation through induction of Hes5 expression.