We compared expression of the paralogous LIM-homeodomain genes Lhx1 and Lhx5 in the developing rostral forebrain of mouse and chicken. Both genes are expressed in similar patterns in the septum, preoptic region, and related areas of the basal telencephalon, including the medial septum/diagonal band nuclei and the medial extended amygdala. In the septum, the expression of Lhx5 and Lhx1 appears to be specifically related to the pallial septum and its derivatives in mouse and chicken, and may produce the glutamatergic neurons observed in the diagonal band/medial septum nuclei. The preoptic area expresses both Lhx1 and Lhx5 in mouse and chicken, and appears to produce gamma-aminobutyric acid (GABA)ergic, glutamatergic, and cholinergic cells for the preoptic region and basal telencephalon. In addition, in mouse and chicken Lhx5 is expressed in two extratelencephalic domains that appear to contribute Lhx5-expressing cells to the basal telencephalon, including the supraoptoparaventricular hypothalamic domain and the eminentia thalami. In contrast, there are striking differences in the pallial expression of Lhx1 and Lhx5 between mouse and chicken. Both genes are expressed in Cajal-Retzius cells, and Lhx5 is also present in most pallial sources of Cajal-Retzius cells (including the cortical hem and retrobulbar area) and in the olfactory bulbs in the mouse. In contrast, putative Cajal-Retzius cells, the retrobulbar area, and the olfactory bulb of chicken do not express the paralog genes cLhx1/cLhx5. Moreover, the cortical hem-although it expresses cLhx5-is very tiny in chicken. We discuss the consequences of these differences in Lhx1/Lhx5 expression between mouse and chicken for pallial/cortical evolution.