The development of stable specialized cell types in multicellular organisms relies on mechanisms controlling inductive intercellular signals and the competence of cells to respond to such signals. In developing cerebral cortex, progenitors generate only glutamatergic excitatory neurons despite being exposed to signals with the potential to initiate the production of other neuronal types, suggesting that their competence is limited. Here, we tested the hypothesis that this limitation is due to their expression of transcription factor Pax6. We used bulk and single-cell RNAseq to show that conditional cortex-specific Pax6 deletion from the onset of cortical neurogenesis allowed some progenitors to generate abnormal lineages resembling those normally found outside the cortex. Analysis of selected gene expression showed that the changes occurred in specific spatiotemporal patterns. We then compared the responses of control and Pax6-deleted cortical cells to in vivo and in vitro manipulations of extracellular signals. We found that Pax6 loss increased cortical progenitors’ competence to generate inappropriate lineages in response to extracellular factors normally present in developing cortex, including the morphogens Shh and Bmp4. Regional variation in the levels of these factors could explain spatiotemporal patterns of fate change following Pax6 deletion in vivo. We propose that Pax6’s main role in developing cortical cells is to minimize the risk of their development being derailed by the potential side effects of morphogens engaged contemporaneously in other essential functions.