Generation of distinct cortical projection neuron subtypes during development relies in part on repression of alternative neuron identities. It was reported that the special AT-rich sequence-binding protein 2 (Satb2) is required for proper development of callosal neuron identity and represses expression of genes that are essential for subcerebral axon development. Surprisingly, Satb2 has recently been shown to be necessary for subcerebral axon development. Here, we unravel a previously unidentified mechanism underlying this paradox. We show that SATB2 directly activates transcription of forebrain embryonic zinc finger 2 (Fezf2) and SRY-box 5 (Sox5), genes essential for subcerebral neuron development. We find that the mutual regulation between Satb2 and Fezf2 enables Satb2 to promote subcerebral neuron identity in layer 5 neurons, and to repress subcerebral characters in callosal neurons. Thus, Satb2 promotes the development of callosal and subcerebral neurons in a cell context-dependent manner.