Inactivating mutations in the transcriptional repression factor Capicua (CIC) occur in approximately 50% of human oligodendrogliomas, but mechanistic links to pathogenesis are unclear. To address this question, we generated Cic-deficient mice and human oligodendroglioma cell models. Genetic deficiency in mice resulted in a partially penetrant embryonic or perinatal lethal phenotype, with the production of an aberrant proliferative neural population in surviving animals. In vitro cultured neural stem cells derived from Cic conditional knockout mice bypassed an EGF requirement for proliferation and displayed a defect in their potential for oligodendrocyte differentiation. Cic is known to participate in gene suppression that can be relieved by EGFR signal, but we found that cic also activated expression of a broad range of EGFR-independent genes. In an orthotopic mouse model of glioma, we found that Cic loss potentiated the formation and reduced the latency in tumor development. Collectively, our results define an important role for Cic in regulating neural cell proliferation and lineage specification, and suggest mechanistic explanations for how CIC mutations may impact the pathogenesis and therapeutic targeting of oligodendroglioma. Cancer Res; 77(22); 6097–108. ©2017 AACR.