The specification and innervation of cerebral subregions is a complex layer-specific process, primed by region-specific transcription factor expression and axonal guidance cues. In Emx2-/- mice, the hippocampus fails to form a normal dentate gyrus as well as the normal layering of principal neurons in the hippocampus proper. Here, we analyzed the late embryonic and postnatal development of the hippocampal formation and its axonal projections in mice lacking Emx2 expression in vitro. As these mutants die perinatally, we used slice cultures of Emx2 mutant hippocampus to circumvent this problem. In late embryonic Emx2-/- cultivated hippocampi, both the perforant path as well as the distribution of calretinin-positive cells are affected. Traced entorhinal afferents in co-cultures with hippocampus from embryonic Emx2-/- mice terminate diffusely in the prospective dentate gyrus in contrast to the layer-specific termination of co-cultures from wild-type littermates. In addition, in brain slice cultures from null mutants the presumptive dentate gyrus failed to develop its normal cytoarchitecture and mature dentate granule cells, including the lack of their mossy fiber projection. Our data indicate that Emx2 is essential for the terminal differentiation of granular cells and the correct formation of extrinsic and intrinsic hippocampal connections.