Sox8 and Sox10 are two closely related transcription factors of the Sox protein family with overlapping expression patterns during development. They are believed to perform very similar functions because several developmental processes, including enteric nervous system development and oligodendrocyte differentiation, are regulated by both Sox proteins. To analyze the extent of functional equivalence between the two Sox proteins, we employed targeted mutagenesis to replace Sox10 with Sox8 in the mouse. In mice that expressed Sox8 instead of Sox10, Sox10 deficiency was phenotypically rescued to different extents in affected tissues. Whereas development of glial cells and neurons in the sensory and sympathetic parts of the peripheral nervous system was almost normal when Sox10 was replaced by Sox8, melanocyte development was as defective as in Sox10-deficient mice. The ability of Sox8 to rescue the defects in enteric nervous system development and oligodendrocyte differentiation of Sox10-deficient mice was limited. We conclude that the extent of functional equivalence depends on the tissue and that, despite their relatedness, Sox8 and Sox10 have more unique functions than previously appreciated.