Herein we demonstrate that Zfhx1b subpallial expression is directly positively regulated by Dlx1&2, and is required in the MGE to generate cortical interneurons that express Cxcr7, MafB and cMaf. In its absence, Nkx2-1 expression is not repressed, and cells that ordinarily would become cortical interneurons are transformed towards the NPY/nNos/Sst subtype of striatal GABAeric interneuron. Furthermore, it is possible that the Zfhx1b-/- phenotype is also caused by defects in migration and differentiation that contribute to the formation of subpallial ectopia. However, below we largely concentrate on discussing the evidence that Zfhx1b regulates cell-type specification.