Sox2 is expressed in basal epithelial cells of the tongue, with high levels in taste bud placodes, fungiform papillae, and mature taste cells, and low levels in filiform papillae. High Sox2 expression appears to lie downstream from canonical Wnt signaling. In hypomorphic Sox2(EGFP/LP) embryos, placodes form but no mature taste buds develop. In contrast, transgenic overexpression of Sox2 in the basal cells inhibits differentiation of filiform keratinocytes. Together, our loss-of-function and gain-of-function studies suggest that Sox2 functions in a dose-dependent manner to regulate the differentiation of endodermal progenitor cells of the tongue into taste bud sensory cells versus keratinocytes.