The vertebrate brain is among the most complex biological structures of which the organization remains unclear. Increasing numbers of studies have accumulated on the molecular basis of midbrain/hindbrain development, yet relatively little is known about forebrain organization. Nested expression among Otx and Emx genes has implicated their roles in rostral brain regionalization, but single mutant phenotypes of these genes have not provided sufficient information. In order to genetically determine the interaction between Emx and Otx genes in forebrain development, we have examined Emx2−/−Otx2+/− double mutants and Emx2 knock-in mutants into the Otx2 locus (Otx2+/Emx2). Emx2−/−Otx2+/− double mutants did not develop diencephalic structures such as ventral thalamus, dorsal thalamus/epithalamus and anterior pretectum. The defects were attributed to the loss of the Emx2-positive region at the three- to four-somite stage, when its expression occurs in the laterocaudal forebrain primordia. Ventral structures such as the hypothalamus, mammillary region and tegmentum developed normally. Moreover, dorsally the posterior pretectum and posterior commissure were also present in the double mutants. In contrast, Otx2+/Emx2 knock-in mutants displayed the majority of these diencephalic structures; however, the posterior pretectum and posterior commissure were specifically absent. Consequently, development of the dorsal and ventral thalamus and anterior pretectum requires cooperation between Emx2 and Otx2, whereas Emx2 expression is incompatible with development of the commissural region of the pretectum.