Mice lacking the Dlx1 and Dlx2 homeobox genes (Dlx1/2 mutants) have severe deficits in subpallial differentiation, including overexpression of the Gsx1 and Gsx2 homeobox genes. To investigate whether Gsx overexpression contributes to the Dlx1/2 mutant phenotypes, we made compound loss-of-function mutants. Eliminating Gsx2 function from the Dlx1/2 mutants rescued the increased expression of Ascl1 and Hes5 (Notch signaling mediators) and Olig2 (oligodendrogenesis mediator). In addition, Dlx1/2;Gsx2 mutants, like Dlx1/2;Ascl1 mutants, exacerbated the Gsx2 and Dlx1/2 patterning and differentiation phenotypes, particularly in the lateral ganglionic eminence (LGE) caudal ganglionic eminence (CGE), and septum, including loss of GAD1 expression. On the other hand, eliminating Gsx1 function from the Dlx1/2 mutants (Dlx1/2;Gsx1 mutants) did not severely exacerbate their phenotype; on the contrary, it resulted in a partial rescue of medial ganglionic eminence (MGE) properties, including interneuron migration to the cortex. Thus, despite their redundant properties, Gsx1 and -2 have distinct interactions with Dlx1 and -2. Gsx2 interaction is strongest in the LGE, CGE, and septum, whereas the Gsx1 interaction is strongest in the MGE. From these studies, and earlier studies, we present a model of the transcriptional network that regulates early steps of subcortical development.