The conserved barH-like homeobox-2 gene barhl2 acts downstream of orthodentricle-2 and together with iroquois-3 in establishment of the caudal forebrain signaling center induced by Sonic Hedgehog.

In this study, we investigated the gene regulatory network that governs formation of the Zona limitans intrathalamica (ZLI), a signaling center that secretes Sonic Hedgehog (Shh) to control the growth and regionalization of the caudal forebrain. Using loss- and gain-of-function, explants and grafting experiments in amphibians, we demonstrate that barhl2 acts downstream of otx2 and together with the iroquois (irx)-3 gene in establishment of the ZLI compartment initiated by Shh influence. We find that the presumptive (pre)-ZLI domain expresses barhl2, otx2 and irx3, whereas the thalamus territory caudally bordering the pre-ZLI expresses barhl2, otx2 and irx1/2 and early on irx3. We demonstrate that Barhl2 activity is required for determination of the ZLI and thalamus fates and that within the p2 alar plate the ratio of Irx3 to Irx1/2 contributes to ZLI specification and size determination. We show that when continuously exposed to Shh, neuroepithelial cells coexpressing barhl2, otx2 and irx3 acquire two characteristics of the ZLI compartment-the competence to express shh and the ability to segregate from anterior neural plate cells. In contrast, neuroepithelial cells expressing barhl2, otx2 and irx1/2, are not competent to express shh. Noteworthy in explants, under Shh influence, ZLI-like cells segregate from thalamic-like cells. Our study establishes that Barhl2 activity plays a key role in p2 alar plate patterning, specifically ZLI formation, and provides new insights on establishment of the signaling center of the caudal forebrain.