Tcf7l2 plays crucial roles in forebrain development through regulation of thalamic and habenular neuron identity and connectivity.

The thalamus acts as a central integrator for processing and relaying sensory and motor information to and from the cerebral cortex, and the habenula plays pivotal roles in emotive decision making by modulating dopaminergic and serotonergic circuits. These neural compartments are derived from a common developmental progenitor domain, called prosomere 2, in the caudal forebrain. Thalamic and habenular neurons exhibit distinct molecular profile, neurochemical identity, and axonal circuitry. However, the mechanisms of how their progenitors in prosomere 2 give rise to these two populations of neurons and contribute to the forebrain circuitry remains unclear. In this study, we discovered a previously unrecognized role for Tcf7l2, a transcription factor known as the canonical Wnt nuclear effector and diabetes risk-conferring gene, in establishing neuronal identity and circuits of the caudal forebrain. Using genetic and chemical axon tracers, we showed that efferent axons of the thalamus, known as the thalamocortical axons (TCAs), failed to elongate normally and strayed from their normal course to inappropriate locations in the absence of Tcf7l2. Further experiments with thalamic explants revealed that the pathfinding defects of Tcf7l2-deficient TCAs were associated at least in part with downregulation of guidance receptors Robo1 and Robo2 expression. Moreover, the fasciculus retroflexus, the main habenular output tract, was missing in embryos lacking Tcf7l2. These axonal defects may result from dysregulation of Nrp2 guidance receptor. Strikingly, loss of Tcf7l2 caused a post-mitotic identity switch between thalamic and habenular neurons. Despite normal acquisition of progenitor identity in prosomere 2, Tcf7l2-deficient thalamic neurons adopted a molecular profile of a neighboring forebrain derivative, the habenula. Conversely, habenular neurons failed to maintain their normal post-mitotic neuronal identity and acquired a subset of thalamic neuronal features in the absence of Tcf7l2. Our findings suggest a unique role for Tcf7l2 in generating distinct neuronal phenotypes from homogeneous progenitor population, and provide a better understanding of the mechanism underlying neuronal specification, differentiation, and connectivity of the developing caudal forebrain.