Establishment of neuronal diversity is a central topic in developmental neurobiology. Prior studies implicated Pitx2, a paired-like homeodomain transcription factor, in mouse subthalamic nucleus neuronal development, but precise stages of neuronal differentiation affected (migration, axon outgrowth, fate specification) and underlying mechanisms were unknown. Here we report lineage tracing experiments using Pitx2(cre/+), Pitx2(cre/null), and conditional nuclear lacZ reporter mice to track embryonic Pitx2 expressing neurons. Migration of subthalamic nucleus and hypothalamic neurons was severely arrested in Pitx2(cre/null) embryos, and subclasses of subthalamic nucleus neurons identified by Lmx1b, Foxp1, and Foxp2-gene expression revealed differing sensitivities to Pitx2 dosage. Interestingly, embryonic subthalamic nucleus development was unaffected in Lmx1b null mice, suggesting that Pitx2 and Lmx1b act via independent genetic pathways. These data provide the first direct evidence for Pitx2-dependent neuronal migration in the developing hypothalamus, and demonstrate that complex transcriptional networks regulate regional specialization of distinct hypothalamic and subthalamic nucleus neurons.