Demyelinating diseases such as multiple sclerosis (MS) are among the most disabling and cost-intensive neurological disorders. The loss of myelin in the central nervous system, produced by oligodendrocytes (OLs), impairs saltatory nerve conduction, leading to motor and cognitive deficits. Immunosuppression therapy has a limited efficacy in MS patients, arguing for a paradigm shift to strategies that target OL lineage cells to achieve myelin repair. The inhibitory microenvironment in MS lesions abrogates the expansion and differentiation of resident OL precursor cells (OPCs) into mature myelin-forming OLs. Recent studies indicate that OPCs display a highly plastic ability to differentiate into alternative cell lineages under certain circumstances. Thus, understanding the mechanisms that maintain and control OPC fate and differentiation into mature OLs in a hostile, non-permissive lesion environment may open new opportunities for regenerative therapies. In this review, we will focus on 1) the plasticity of OPCs in terms of their developmental origins, distribution, and differentiation potentials in the normal and injured brain; 2) recent discoveries of extrinsic and intrinsic factors and small molecule compounds that control OPC specification and differentiation; and 3) therapeutic potential for motivation of neural progenitor cells and reprogramming of differentiated cells into OPCs and their likely impacts on remyelination. OL-based therapies through activating regenerative potentials of OPCs or cell replacement offer exciting opportunities for innovative strategies to promote remyelination and neuroprotection in devastating demyelinating diseases like MS.