Regional patterning of the cerebral cortex is initiated by morphogens secreted by patterning centers that establish graded expression of transcription factors within cortical progenitors. Here, we show that Dmrt5 is expressed in cortical progenitors in a high-caudomedial to low-rostrolateral gradient. In its absence, the cortex is strongly reduced and exhibits severe abnormalities, including agenesis of the hippocampus and choroid plexus and defects in commissural and thalamocortical tracts. Loss of Dmrt5 results in decreased Wnt and Bmp in one of the major telencephalic patterning centers, the dorsomedial telencephalon, and in a reduction of Cajal-Retzius cells. Expression of the dorsal midline signaling center-dependent transcription factors is downregulated, including Emx2, which promotes caudomedial fates, while the rostral determinant Pax6, which is inhibited by midline signals, is upregulated. Consistently, Dmrt5(-/-) brains exhibit patterning defects with a dramatic reduction of the caudomedial cortex. Dmrt5 is increased upon the activation of Wnt signaling and downregulated in Gli3(xt/xt) mutants. We conclude that Dmrt5 is a novel Wnt-dependent transcription factor required for early cortical development and that it may regulate initial cortical patterning by promoting dorsal midline signaling center formation and thereby helping to establish the graded expression of the other transcription regulators of cortical identity.