The basic organization of somatosensory circuits in the spinal cord is already setup during the initial patterning of the dorsal neural tube. Extrinsic signals, such as Wnt and TGF-β pathways, activate combinatorial codes of transcription factors that are responsible for generating a pattern of discrete domains of dorsal progenitors (dp). These progenitors will give rise to distinct dorsal interneurons (dI). The Wnt/ βcatenin signaling pathway controls specification of dp/dI1-3 progenitors and interneurons. According to the current model in the field, Wnt/βcatenin activity seems to act in a graded fashion in the spinal cord, as different relative levels determine the identity of adjacent progenitors. However, it is not clear how this activity gradient is controlled and how the identities of dI1-3 are differentially regulated by Wnt signalling. We have determined that two SoxD transcription factors, Sox5 and Sox6, are expressed in restricted domains of dorsal progenitors in the neural tube. Using gain- and loss-of function approaches in chicken embryos, we have established that Sox5 controls cell fate specification of dp2 and dp3 progenitors and, as a result, controls the correct number of the corresponding dorsal interneurons (dI2 and dI3). Furthermore, Sox5 exerts its function by restricting dorsally Wnt signaling activity via direct transcriptional induction of the negative Wnt pathway regulator Axin2. By that way, Sox5 acts as a Wnt pathway modulator that contributes to sharpen the dorsal gradient of Wnt/βcatenin activity to control the distinction of two functionally distinct types of interneurons, dI2 and dI3 involved in the somatosensory relay.