The subventricular zone (SVZ) is a source of neural progenitors throughout brain development. The identification and purification of these progenitors and the analysis of their lineage potential are fundamental issues for future brain repair therapies. We demonstrate that early postnatal NG2-expressing (NG2(+)) progenitor cells located in the SVZ self-renew in vitro and display phenotypic features of transit-amplifier type C-like multipotent cells. NG2(+) cells in the SVZ are highly proliferative and express the epidermal growth factor receptor, the transcription factors Dlx, Mash1, and Olig2, and the Lewis X (LeX) antigen. We show that grafted early postnatal NG2(+) cells generate hippocampal GABAergic interneurons that propagate action potentials and receive functional glutamatergic synaptic inputs. Our work identifies Dlx(+)/Mash1(+)/LeX(+)/NG2(+)/GFAP-negative cells of the SVZ as a new class of postnatal multipotent progenitor cells that may represent a specific cellular reservoir for renewal of postnatal and adult inhibitory interneurons in the hippocampus.