The striatum has a central role in many neurobiological processes, yet little is known about the molecular control of its development. Inroads to this subject have been made, due to the discovery of transcription factors, such as the Dlx genes, whose expression patterns suggest that they have a role in striatal development. We report that mice lacking both Dlx-1 and Dlx-2 have a time-dependent block in striatal differentiation. In these mutants, early born neurons migrate into a striatum-like region, which is enriched for markers of the striosome (patch) compartment. However, later born neurons accumulate within the proliferative zone. Several lines of evidence suggest that mutations in Dlx-1 and Dlx-2 produce abnormalities in the development of the striatal subventricular zone and in the differentiation of striatal matrix neurons.