Hypothalamic nuclei, including the anterior periventricular (aPV), paraventricular (PVN), and supraoptic (SON) nuclei strongly express the homeobox gene Orthopedia (Otp) during embryogenesis. Targeted inactivation of Otp in the mouse results in the loss of these nuclei in the homozygous null neonates. The Otp null hypothalamus fails to secrete neuropeptides somatostatin, arginine vasopressin, oxytocin, corticotropin-releasing hormone, and thyrotropin-releasing hormone in an appropriate spatial and temporal fashion, and leads to the death of Otp null pups shortly after birth. Failure to produce these neuropeptide hormones is evident prior to E15.5, indicating a failure in terminal differentiation of the aPV/PVN/SON neurons. Absence of elevated apoptotic activity, but reduced cell proliferation together with the ectopic activation of Six3 expression in the presumptive PVN, indicates a critical role for Otp in terminal differentiation and maturation of these neuroendocrine cell lineages. Otp employs distinct regulatory mechanisms to modulate the expression of specific molecular markers in the developing hypothalamus. At early embryonic stages, expression of Sim2 is immediately downregulated as a result of the absence of Otp, indicating a potential role for Otp as an upstream regulator of Sim2. In contrast, the regulation of Brn4 which is also expressed in the SON and PVN is independent of Otp function. Hence no strong evidence links Otp and Brn4 in the same regulatory pathway. The involvement of Otp and Sim1 in specifying specific hypothalamic neurosecretory cell lineages is shown to operate via distinct signaling pathways that partially overlap with Brn2.