Several different populations of interneurons in the murine cortex, including somatostatin (SST)- or parvalbumin (PV)-expressing cells, are born in the ventral ganglionic eminences during mid-gestation and then migrate tangentially to the cortex. SST is expressed by some interneuron progenitors in the cerebral cortex and in migrating populations in the ventrolateral cortex at birth. However, PV (also known as PVALB) is not expressed by interneurons until the second postnatal week after reaching the cortex, suggesting that molecular cues in the cerebral cortex might be involved in the differentiation process. BMP4 is expressed at high levels in the somatosensory cortex at the time when the PV(+) interneurons differentiate. Treatment of cortical cultures containing interneuron precursors is sufficient to generate PV(+) interneurons prematurely and inhibit SST differentiation. Furthermore, overexpression of BMP4 in vivo increases the number of interneurons expressing PV, with a reduction in the number of SST(+) interneurons. PV(+) interneurons in the cortex express BMP type I receptors and a subpopulation displays activated BMP signaling, assessed by downstream molecules including phosphorylated SMAD1/5/8. Conditional mutation of BMP type I receptors in interneuron precursors significantly reduces the number of cortical PV(+) interneurons in the adult brain. Thus, BMP4 signaling through type I receptors regulates the differentiation of two major medial ganglionic eminence-derived interneuron populations and defines their relative numbers in the cortex.