Neural crest cells migrate extensively and give rise to most of the peripheral nervous system, including sympathetic, parasympathetic, enteric, and dorsal root ganglia. We studied how parasympathetic ganglia form close to visceral organs and what their precursors are. We find that many cranial nerve-associated crest cells coexpress the pan-autonomic determinantPaired-like homeodomain 2b(Phox2b) together with markers of Schwann cell precursors. Some give rise to Schwann cells after down-regulation of PHOX2b. Others form parasympathetic ganglia after being guided to the site of ganglion formation by the nerves that carry preganglionic fibers, a parsimonious way of wiring the pathway. Thus, cranial Schwann cell precursors are the source of parasympathetic neurons during normal development.