The quaking (Qk) locus expresses a family of RNA binding proteins, and the expression of several alternatively spliced isoforms coincides with the development of oligodendrocytes and the onset of myelination. Quaking viable (Qk(v)) mice harboring an autosomal recessive mutation in this locus have uncompacted myelin in the central nervous system owing to the inability of oligodendrocytes to properly mature. Here we show that the expression of two QKI isoforms, absent from oligodendrocytes of Qk(v) mice, induces cell cycle arrest of primary rat oligodendrocyte progenitor cells and differentiation into oligodendrocytes. Injection of retroviruses expressing QKI into the telencephalon of mouse embryos induced differentiation and migration of multipotential neural progenitor cells into mature oligodendrocytes localized in the corpus callosum. The mRNA encoding the cyclin-dependent kinase (CDK)-inhibitor p27(Kip1) was bound and stabilized by QKI, leading to an increased accumulation of p27(Kip1) protein in oligodendrocytes. Our findings demonstrate that QKI is upstream of p27(Kip1) during oligodendrocyte differentiation.