During pituitary organogenesis, the progressive differentiation of distinct pituitary-specific cell lineages from a common primordium involves a series of developmental decisions and inductive interactions. Targeted gene disruption in mice showed that Lhx3, a LIM homeobox gene expressed in the pituitary throughout development, is essential for differentiation and proliferation of pituitary cell lineages. In mice homozygous for the Lhx3 mutation, Rathke's pouch formed but failed to grow and differentiate; such mice lacked both the anterior and intermediate lobes of the pituitary. The determination of all pituitary cell lineages, except the corticotrophs, was affected, suggesting that a distinct, Lhx3-independent ontogenetic pathway exists for the initial specification of this lineage.