The homeobox genes in the Dlx family are required for differentiation of basal forebrain neurons and craniofacial morphogenesis. Herein, we studied the expression of Dlx-1, Dlx-2, and Dlx-5 RNA and protein in the mouse forebrain from embryonic day 10.5 (E10.5) to E12.5. We provide evidence that Dlx-2 is expressed before Dlx-1, which is expressed before Dlx-5. We also demonstrate that these genes are expressed in the same cells, which may explain why single mutants of the Dlx genes have mild phenotypes. The DLX proteins are localized primarily to the nucleus, although DLX-5 also can be found in the cytoplasm. During development, the fraction of Dlx-positive cells increases in the ventricular zone. Analysis of the distribution of DLX-1 and DLX-2 in M-phase cells suggests that these proteins are distributed symmetrically to daughter cells during mitosis. We propose that DLX-negative cells in the ventricular zone are specified progressively to become DLX-2-expressing cells during neurogenesis; as these cells differentiate, they go on to express DLX-1, DLX-5, and DLX-6. This process appears to be largely the same in all regions of the forebrain that express the Dlx genes. In the basal telencephalon, these DLX-positive cells differentiate into projection neurons of the striatum and pallidum as well as interneurons, some of which migrate to the cerebral cortex and the olfactory bulb.