Hypothalamic tanycytes, a radial glial-like ependymal cell population that expresses numerous genes selectively enriched in embryonic hypothalamic progenitors and adult neural stem cells, have recently been observed to serve as a source of adult-born neurons in the mammalian brain. The genetic mechanisms that regulate the specification and maintenance of tanycyte identity are unknown, but are critical for understanding how these cells can act as adult neural progenitor cells. We observe that LIM (Lin-11, Isl-1, Mec-3)-homeodomain geneLhx2is selectively expressed in hypothalamic progenitor cells and tanycytes. To test the function ofLhx2in tanycyte development, we used an intersectional genetic strategy to conditionally deleteLhx2in posteroventral hypothalamic neuroepithelium, both embryonically and postnatally. We observed that tanycyte development was severely disrupted whenLhx2function was ablated during embryonic development.Lhx2-deficient tanycytes lost expression of tanycyte-specific genes, such asRax, while also displaying ectopic expression of genes specific to cuboid ependymal cells, such asRarres2. Ultrastructural analysis revealed that mutant tanycytes exhibited a hybrid identity, retaining radial morphology while becoming multiciliated. In contrast, postnatal loss of function ofLhx2resulted only in loss of expression of tanycyte-specific genes. Using chromatin immunoprecipitation, we further showed that Lhx2 directly regulated expression ofRax, an essential homeodomain factor for tanycyte development. This study identifiesLhx2as a key intrinsic regulator of tanycyte differentiation, sustainingRax-dependent activation of tanycyte-specific genes while also inhibiting expression of ependymal cell-specific genes. These findings provide key insights into the transcriptional regulatory network specifying this still poorly characterized cell type.