The Schwann cell lineage originates from multipotent neural crest cells, which play an essential role in establishing the vertebrate embryonic body plan. As neural crest cells migrate and associate with developing peripheral nerves, they give rise to Schwann cell precursors — a distinct population of nerve-associated multipotent progenitors capable of generating not only peripheral glia but also neurons, melanocytes, neuroendocrine cells, and mesenchymal derivatives. Schwann cell precursors that are not recruited into these alternative lineages progressively undergo fate restriction and differentiate into diverse peripheral glial populations, including myelinating, non-myelinating, terminal, and sensory Schwann cells. In my talk, I will discuss how the developmental potential of neural crest cells and Schwann cell precursors becomes progressively restricted, and how this process shapes the remarkable diversity of peripheral glial cell types.