In chronic demyelinating lesions of the central nervous system, insufficient generation of oligodendrocytes (OLs) is not due to a lack of oligodendrocyte precursor cells (OPCs), because the accumulation of OPCs and premyelinating OLs can be observed within these lesions. Here we sought to identify the basis for the failure of OLs to achieve terminal differentiation in chronic demyelinating lesions through the utilization of plp1-overexpressing (Plp tg/−) mice. These mice are characterized by progressive demyelination in young adults and chronic demyelinating lesions at more mature stages. We show that neural stem cells, which are the precursors of OL-lineage cells, are present in the Plp tg/− mouse brain and that their multipotentiality and ability to self-renew are comparable to those of wild-type adults in culture. Lineage-tracing experiments using a transgenic mouse line, in which an inducible Cre recombinase is knocked in at the Olig2 locus, revealed that Olig2-lineage cells preferentially differentiated into OPCs and premyelinating OLs, but not into astrocytes, in the Plp tg/− mouse brain. These Olig2-lineage cells matured to express myelin basic protein but after that their processes degenerated in the chronic demyelinating lesions of the Plp tg/− brain. These results indicate that in chronic demyelinated lesions more OL-lineage cells are produced as part of the repair process, but their processes degenerate after maturation. © 2012 Wiley Periodicals, Inc.