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The vertebrate retina and hypothalamus, which emerge from adjacent regions of the ventral diencephalon, provide accessible experimental systems for analysis of the molecular mechanisms by which neuronal subtype diversity is specified, and how this neuronal subtype diversity regulates perception and behavior. Although the retina emerges as a lateral extension of the hypothalamus prior to the onset of neurogenesis, the retina and hypothalamus go on to eventually be comprised of almost entirely different cell types, and differ extensively in the spatial organization, function, and connectivity of these cells. Despite these differences in cell composition, there are a number of mechanistic and molecular similarities in the process of cell fate specification in both organs, including a stereotyped temporal sequence in which major cell types are generated. Although a handful of genes have been identified in both systems that direct cell fate specification, many more remain to be characterized, and large numbers of candidate genes have been identified in recent high-throughput screens, particularly in retina. Experimental challenges for the near future include functional analysis of the genes identified so far, and the use of the molecular pathways gained from analysis of the development of specific neuronal lineages to study the contribution of these cells to perception and behavior.