Constitutive activation of Wnt/β-catenin inhibits oligodendrocyte myelination. Tcf7l2/Tcf4, a β-catenin transcriptional partner, is required for oligodendrocyte differentiation. How Tcf7l2 modifies β-catenin signalling and controls myelination remains elusive. Here we define a stage-specific Tcf7l2-regulated transcriptional circuitry in initiating and sustaining oligodendrocyte differentiation. Multistage genome occupancy analyses reveal that Tcf7l2 serially cooperates with distinct co-regulators to control oligodendrocyte lineage progression. At the differentiation onset, Tcf7l2 interacts with a transcriptional co-repressor Kaiso/Zbtb33 to block β-catenin signalling. During oligodendrocyte maturation, Tcf7l2 recruits and cooperates with Sox10 to promote myelination. In that context, Tcf7l2 directly activates cholesterol biosynthesis genes and cholesterol supplementation partially rescues oligodendrocyte differentiation defects in Tcf712 mutants. Together, we identify stage-specific co-regulators Kaiso and Sox10 that sequentially interact with Tcf7l2 to coordinate the switch at the transitions of differentiation initiation and maturation during oligodendrocyte development, and point to a previously unrecognized role of Tcf7l2 in control of cholesterol biosynthesis for CNS myelinogenesis.