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Certain murine leukemia viruses (MLVs) are capable of inducing fatal progressive spongiform motor neuron disease in mice that is largely mediated by viral Env glycoprotein expression within central nervous system (CNS) glia. While the etiologic mechanisms and the glial subtypes involved remain unresolved, infection of NG2 glia was recently observed to correlate spatially and temporally with altered neuronal physiology and spongiogenesis. Since one role of NG2 cells is to serve as oligodendrocyte (OL) progenitor cells (OPCs), we examined here whether their infection by neurovirulent (FrCasE) or nonneurovirulent (Fr57E) ecotropic MLVs influenced their viability and/or differentiation. Here, we demonstrate that OPCs, but not OLs, are major CNS targets of both FrCasE and Fr57E. We also show that MLV infection of neural progenitor cells (NPCs) in culture did not affect survival, proliferation, or OPC progenitor marker expression but suppressed certain glial differentiation markers. Assessment of glial differentiation in vivo using transplanted transgenic NPCs showed that, while MLVs did not affect cellular engraftment or survival, they did inhibit OL differentiation, irrespective of MLV neurovirulence. In addition, in chimeric brains, where FrCasE-infected NPC transplants caused neurodegeneration, the transplanted NPCs proliferated. These results suggest that MLV infection is not directly cytotoxic to OPCs but rather acts to interfere with OL differentiation. Since both FrCasE and Fr57E viruses restrict OL differentiation but only FrCasE induces overt neurodegeneration, restriction of OL maturation alone cannot account for neuropathogenesis. Instead neurodegeneration may involve a two-hit scenario where interference with OPC differentiation combined with glial Env-induced neuronal hyperexcitability precipitates disease. IMPORTANCE A variety of human and animal retroviruses are capable of causing central nervous system (CNS) neurodegeneration manifested as motor and cognitive deficits. These retroviruses infect a variety of CNS cell types; however, the specific role each cell type plays in neuropathogenesis remains to be established. The NG2 glia, whose CNS functions are only now emerging, are a newly appreciated viral target in murine leukemia virus (MLV)-induced neurodegeneration. Since one role of NG2 glia is that of oligodendrocyte progenitor cells (OPCs), we investigated here whether their infection by the neurovirulent MLV FrCasE contributed to neurodegeneration by affecting OPC viability and/or development. Our results show that both neurovirulent and nonneurovirulent MLVs interfere with oligodendrocyte differentiation. Thus, NG2 glial infection could contribute to neurodegeneration by preventing myelin formation and/or repair and by suspending OPCs in a state of persistent susceptibility to excitotoxic insult mediated by neurovirulent virus effects on other glial subtypes.