In the embryonic telencephalon, the pallial-subpallial boundary (PSB) separates the dorsal Pax6+ pallium from the ventral Gsh2+ subpallium. Previous studies have revealed that this region is a source of cells that will populate both the olfactory bulb and basal telencephalic limbic system. However, the level of progenitor cell heterogeneity and developmental genetic regulation of this progenitor region remains to be fully elucidated. In this study we carried out a comprehensive analysis of gene expression patterns at the PSB, in addition to an examination of the combinatorial function of Pax6 and Gsh2 in the specification of the PSB. First, we reveal that the PSB is comprised of a complex mix of molecularly distinct progenitor pools. In addition, by analysis of single Sey, Gsh2, and Sey/Gsh2 double mutant mice, we demonstrate that both Pax6 and Gsh2 are directly required for major aspects of PSB progenitor specification. Our analysis also reveals that the establishment of the epidermal growth factor receptor positive lateral cortical stream migratory route to the basal telencephalon is Pax6 dependent. Thus, in addition to their well-characterized cross-repressive roles in dorsal/ventral patterning our analyses reveal important novel functions of Gsh2 and Pax6 in the regulation of PSB progenitor pool specification and patterning.