The dentate gyrus is the primary afferent pathway into the hippocampus, but there is little information concerning the molecular influences that govern its formation. In particular, the control of migration and cell positioning of dentate granule cells is not clear. We have characterized more fully the timing and route of granule cell migration during embryogenesis using in utero retroviral injections. Using this information, we developed an in vitro assay that faithfully recapitulates important events in dentate gyrus morphogenesis. In searching for candidate ligands that may regulate dentate granule cell migration, we found that SDF1, a chemokine that regulates cerebellar and leukocyte migration, and its receptor CXCR4 are expressed in patterns that suggest a role in dentate granule cell migration. Furthermore, CXCR4 mutant mice have a defect in granule cell position. Ectopic expression of SDF1 in our explant assay showed that it directly regulates dentate granule cell migration. Our study shows that a chemokine is necessary for the normal development of the dentate gyrus, a forebrain structure crucial for learning and memory.