The neural stem cells that give rise to the neural lineages of the brain can generate their progeny directly or through transit amplifying intermediate neural progenitor cells (INPs). The INP-producing neural stem cells in Drosophila are called type II neuroblasts, and their neural progeny innervate the central complex, a prominent integrative brain center. Here we use genetic lineage tracing and clonal analysis to show that the INPs of these type II neuroblast lineages give rise to glial cells as well as neurons during postembryonic brain development. Our data indicate that two main types of INP lineages are generated, namely mixed neuronal/glial lineages and neuronal lineages. Genetic loss-of-function and gain-of-function experiments show that the gcm gene is necessary and sufficient for gliogenesis in these lineages. The INP-derived glial cells, like the INP-derived neuronal cells, make major contributions to the central complex. In postembryonic development, these INP-derived glial cells surround the entire developing central complex neuropile, and once the major compartments of the central complex are formed, they also delimit each of these compartments. During this process, the number of these glial cells in the central complex is increased markedly through local proliferation based on glial cell mitosis. Taken together, these findings uncover a novel and complex form of neurogliogenesis in Drosophila involving transit amplifying intermediate progenitors. Moreover, they indicate that type II neuroblasts are remarkably multipotent neural stem cells that can generate both the neuronal and the glial progeny that make major contributions to one and the same complex brain structure.