The peripheral autonomic nervous system reaches far throughout the body and includes neurons of diverse functions, such as sympathetic and parasympathetic. We show that the parasympathetic system in mice--including trunk ganglia and the cranial ciliary, pterygopalatine, lingual, submandibular, and otic ganglia--arise from glial cells in nerves, not neural crest cells. The parasympathetic fate is induced in nerve-associated Schwann cell precursors at distal peripheral sites. We used multicolor Cre-reporter lineage tracing to show that most of these neurons arise from bi-potent progenitors that generate both glia and neurons. This nerve origin places cellular elements for generating parasympathetic neurons in diverse tissues and organs, which may enable wiring of the developing parasympathetic nervous system.