Genes of the SOX family of high-mobility group transcription factors are essential during nervous system development. In this study, we show that SOX5 is expressed by neural progenitors in the chick spinal cord and is turned off as differentiation proceeds. The overexpression of SOX5 in neural progenitors causes premature cell cycle exit and prevents terminal differentiation. Conversely, knocking down SOX5 protein extends the proliferative period of neural progenitors and causes marked cell death in a dorsal interneuron (dI3) population. Furthermore, SOX5 reduces WNT-beta-catenin signalling, thereby triggering the expression of the negative regulator of the pathway axin2. We propose that SOX5 regulates the timing of cell cycle exit by opposing WNT-beta-catenin activity on cell cycle progression.