Homeobox genes are an evolutionarily conserved class of transcription factors that are key regulators of developmental processes such as regional specification, patterning, migration and differentiation. In both mouse and humans, the developing forebrain is marked by distinct boundaries of homeobox gene expression at different developmental time points. These genes regulate the patterning of the forebrain along the dorsal/ventral and rostral/caudal axes and are also essential for the differentiation of specific neuronal subtypes. Inhibitory interneurons that arise from the ganglionic eminences and migrate tangentially to the neocortex and hippocampus are dramatically affected by mutations in several homeobox genes. In this review, we discuss the identification, expression patterns, loss- and/or gain-of-function models, and confirmed transcriptional targets for a set of homeobox genes required for the correct development of the forebrain in the mouse. In humans, mutations of homeobox genes expressed in the forebrain have been shown to result in mental retardation, epilepsy or movement disorders. The number of homeobox genes currently linked to human nervous system disease is surprisingly low, perhaps reflecting the essential functions of these genes throughout embryogenesis or the degree of functional redundancy during central nervous system development.