Gene regulatory elements play a key role in orchestrating gene expression during cellular differentiation, but what determines their function over time remains largely unknown. Here, we perform perturbation-based massively parallel reporter assays at seven early time points of neural differentiation to systematically characterize how regulatory elements and motifs within them guide cellular differentiation. By perturbing over 2,000 putative DNA binding motifs in active regulatory regions, we delineate four categories of functional elements, and observe that activity direction is mostly determined by the sequence itself, while the magnitude of effect depends on the cellular environment. We also find that fine-tuning transcription rates is often achieved by a combined activity of adjacent activating and repressing elements. Our work provides a blueprint for the sequence components needed to induce different transcriptional patterns in general and specifically during neural differentiation.