Neural factors are expressed in neural progenitors and regulate neurogenesis and gliogenesis. Recent studies suggested that these factors are also involved in determining specific neuronal fates by regulating the expression of their target genes, thereby creating transcriptional codes for neuronal subtype specification. In the present study, we show that in the zebrafish the neural gene Olig2 and the transcriptional regulator Sim1 are co-expressed in a subset of diencephalic progenitors destined towards the dopaminergic (DA) neuronal fate. While sim1 mRNA is also detected in mature DA neurons, the expression of olig2 is extinguished prior to terminal DA differentiation. Loss of function of either Olig2 or Sim1 leads to impaired DA development. Finally, Olig2 regulates the expression of Sim1 and gain of function of Sim1 rescues the deficits in DA differentiation caused by targeted knockdown of Olig2. Our findings demonstrate for the first time that commitment of basal diencephalic DA neurons is regulated by the combined action of the neural protein Olig2 and its downstream neuronal specific effector Sim1. Developmental Dynamics 238:826–834, 2009. © 2009 Wiley-Liss, Inc.