The zona limitans intrathalamica (ZLI), a narrow compartment in the vertebrate forebrain that bisects the diencephalon transversely, expresses the secreted factor sonic hedgehog (Shh). Because genetic disruption of Shh in mouse causes severe early developmental defects, this strategy has not been useful in identifying a ZLI-specific role for this gene. To modulate Shh signaling in a spatiotemporally restricted manner, we carried out gain- and loss-of-function experiments in chick embryos using in ovo electroporation and found that Shh signaling is required for region-specific gene expression in thalamus and prethalamus, the major diencephalic brain areas flanking the ZLI. We further show that differential competence of thalamic and prethalamic primordia in responding to Shh signaling is regulated by the transcription factor Irx3. We show that, through the release of Shh, the ZLI functions as a local signaling center that regulates the acquisition of identity for these important diencephalic regions.
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