The superior colliculus (SC) in the mammalian midbrain is essential for multisensory integration, attention, and complex behavior (Basso and May, 2017; Cang et al., 2018). The mature SC cytoarchitecture is organized into distinct laminae and composed of a rich variety of neuronal and glial cell types (Ayupe et al., 2023; Edwards et al., 1986; May, 2006; Xie et al., 2021; Zeisel et al., 2018). Precise execution of the developmental programs regulating the generation of SC cell-type diversity is essential, because deficits due to genetic mutations have been associated with neurodevelopmental diseases and SC dysfunction (Jure, 2018; McFadyen et al., 2020). However, the fundamentals directing the ontogeny of the SC are not well understood. Here we pursued systematic lineage tracing at the single progenitor cell level in order to decipher the principles instructing the generation of cell-type diversity in the SC. We combined in silico lineage reconstruction with a novel genetic MADM (Mosaic Analysis with Double Markers)-CloneSeq approach. MADM-CloneSeq enables the unequivocal delineation of cell lineages in situ, and cell identity based on global transcriptome, of individual clonally-related cells. Our systematic reconstructions of cell lineages revealed that all neuronal cell types in SC emerge from local progenitors without any extrinsic source. Strikingly, individual SC progenitors are exceptionally multipotent with the capacity to produce all known excitatory and inhibitory neuron types of the prospective mature SC, with individual clonal units showing no pre-defined composition. At the molecular level we identified an essential role for PTEN signaling in establishing appropriate proportions of specific inhibitory and excitatory neuron types. Collectively, our findings demonstrate that individual multipotent progenitors generate the full spectrum of excitatory and inhibitory neuron types in the developing SC, providing a novel framework for the emergence of cell-type diversity and thus the ontogeny of the mammalian SC.