Promoting oligodendrocyte differentiation represents a promising option for remyelination therapy for treating the demyelinating disease multiple sclerosis (MS). The Wnt effector TCF7l2 was upregulated in MS lesions and had been proposed to inhibit oligodendrocyte differentiation. Recent data suggest the opposite yet underlying mechanisms remain elusive. Here we unravel a previously unappreciated function of TCF7l2 in controlling autocrine bone morphogenetic protein (BMP4)-mediated signaling. Disrupting TCF7l2 in mice of both sexes results in oligodendroglial-specific BMP4 upregulation and canonical BMP4 signaling activation in vivo . Mechanistically, TCF7l2 binds to Bmp4 gene regulatory element and directly represses its transcriptional activity. Functionally, enforced TCF7l2 expression promotes oligodendrocyte differentiation by reducing autocrine BMP4 secretion and dampening BMP4 signaling. Importantly, compound genetic disruption demonstrates that oligodendroglial-specific BMP4 deletion rescues arreste...