The Drosophila CNS contains a variety of glia, including highly specialized glia that reside at the CNS midline and functionally resemble the midline floor plate glia of the vertebrate spinal cord. Both insect and vertebrate midline glia play important roles in ensheathing axons that cross the midline and secreting signals that control a variety of developmental processes. The Drosophila midline glia consist of two spatially and functionally distinct populations. The anterior midline glia (AMG) are ensheathing glia that migrate, surround and send processes into the axon commissures. By contrast, the posterior midline glia (PMG) are non-ensheathing glia. Together, the Notch and hedgehog signaling pathways generate AMG and PMG from midline neural precursors. Notch signaling is required for midline glial formation and for transcription of a core set of midline glial-expressed genes. The Hedgehog morphogen is secreted from ectodermal cells adjacent to the CNS midline and directs a subset of midline glia to become PMG. Two transcription factor genes, runt and engrailed, play important roles in AMG and PMG development. The runt gene is expressed in AMG, represses engrailed and maintains AMG gene expression. The engrailed gene is expressed in PMG, represses runt and maintains PMG gene expression. In addition, engrailed can direct midline glia to a PMG-like non-ensheathing fate. Thus, two signaling pathways and runt-engrailed mutual repression initiate and maintain two distinct populations of midline glia that differ functionally in gene expression, glial migration, axon ensheathment, process extension and patterns of apoptosis.