The diencephalon is the caudal part of the forebrain and is organized into easily identifiable clusters of neurons called nuclei. Neurons in different nuclei project to discrete brain regions. Thus precise organization of the nuclei during forebrain development is necessary to build accurate neural circuits. How diencephalic development is regulated is poorly understood. BMP signaling participates in central nervous system patterning and development at many levels along the neural axis. Based on their expression we hypothesized BMPs play a role in diencephalic development. To test this hypothesis, we electroporated constitutively active and dominant negative forms of type I BMP receptors (Bmpr1a and Bmpr1b) into the embryonic chick forebrain. Ectopic induction of BMP signaling through constitutively active forms of the type I BMP receptors perturbs the normal gene expression patterns in the diencephalon and increases apoptotic cell death. These defects lead to disorganization of the diencephalic nuclei, suggesting BMP signaling is sufficient to modify diencephalic development. Loss-of-function studies, using dominant negative forms of Bmpr1a and Bmpr1b, indicate type I BMP receptors are necessary for normal eye and craniofacial development. However, they do not appear to be required for normal diencephalic development. In summary, our data indicate that while not necessary, BMP signaling via Bmpr1a and Bmpr1b, is sufficient to modify nuclear organization in the chick diencephalon.