Knockout of the Nkx2.1 (Titf-1) homeobox gene in the mouse leads to severe malformation and size reduction of the basal telencephalon/preoptic area and basal hypothalamus, indicating an important role of this gene in forebrain patterning. Here we show that abrogation of the orthologous gene in the frog Xenopus laevis by way of morpholino knockdown also affects the relative size of major regions in both the telencephalon (subpallium versus pallium) and diencephalon (hypothalamus versus thalamus). Remarkably, while a similar effect on the telencephalon was noted previously in Nkx2.1-knockout mice, the effect on the diencephalon seems to be specific for Xenopus. This difference may be explained by the partially dissimilar expression of the orthologous genes in the forebrain of Xenopus and mouse. In both species Nkx2.1 is expressed in the basal telencephalon/preoptic area and basal hypothalamus, but in Xenopus this gene is additionally expressed in the alar hypothalamus. Phylogenetic comparison of Nkx2.1 expression in the forebrain suggests that the expression in the basal telencephalon-preoptic region and alar hypothalamus appeared in the transition from jawless to jawed vertebrates, but the alar hypothalamic expression was later dramatically reduced during evolution to birds and mammals. Our study suggests that changes in the regulation of Nkx2.1 expression have played an important role on the evolution of forebrain development, and emphasizes the potential of the combined analysis of expression and function of master control genes in different vertebrates for unraveling the origin of brain complexity and diversity.