Cholinergic neurons, which express choline acetyltransferase (ChAT), are a major neuron subset generated in the basal forebrain. Areas presumed to be sites of origin of cholinergic neurons are roughly demarcated by expression of Olig2, a basic helix-loop-helix transcription factor, which includes the medial ganglionic eminence, septal area, and anterior entopeduncular/preoptic area. In the present study, we examined the involvement of Olig2 in cholinergic differentiation. When the Olig2-expressing cells at E12.5 were permanently modified to express the lacZ or EGFP gene by tamoxifen-induced Cre-mediated recombination, the cells marked by reporter gene expression were widely distributed in the basal forebrain by E18.5, some of which expressed neuronal markers. We showed that a small number of cells were double-positive for ChAT and X-gal or EGFP in almost all cases. In addition, the number of ChAT+ cells was reduced to 60% in the Olig2 knockout mouse basal forebrain. No evidence of elevated apoptosis or reduced proliferation was observed in the knockout mouse forebrain. The present study provides the first direct evidence for involvement of the Olig2 gene in cholinergic differentiation in the basal forebrain.