Development of the neuroendocrine hypothalamus is characterized by a precise series of morphogenetic milestones culminating in terminal differentiation of neurosecretory cell lineages. The homeobox-containing gene Orthopedia (Otp) is expressed in neurons giving rise to the paraventricular (PVN), supraoptic (SON), anterior periventricular (aPV), and arcuate (ARN) nuclei throughout their development. Homozygous Otp^−/− mice die soon after birth and display progressive impairment of crucial neuroendocrine developmental events such as reduced cell proliferation, abnormal cell migration, and failure in terminal differentiation of the parvocellular and magnocellular neurons of the aPV, PVN, SON, and ARN. Moreover, our data provide evidence that Otp and Sim1, a bHLH-PAS transcription factor that directs terminal differentiation of the PVN, SON, and aPV, act in parallel and are both required to maintain Brn2 expression which, in turn, is required for neuronal cell lineages secreting oxytocin (OT), arginine vasopressin (AVP), and corticotropin-releasing hormone (CRH).