Air breathing is an essential motor function for vertebrates living on land. The rhythm that drives breathing is generated within the central nervous system and relayed via specialised subsets of spinal motor neurons to muscles that regulate lung volume. In mammals, a key respiratory muscle is the diaphragm, which is innervated by motor neurons in the phrenic nucleus. Remarkably, relatively little is known about how this crucial subtype of motor neuron is generated during embryogenesis. Here, we used direct differentiation of motor neurons from mouse embryonic stem cells as a tool to identify genes that direct phrenic neuron identity. We find that three determinants, Pou3f1, Hoxa5 and Notch, act in combination to promote a phrenic neuron molecular identity. We show that Notch signalling induces Pou3f1 in developing motor neurons in vitro and in vivo. This suggests that the phrenic neuron lineage is established through a local source of Notch ligand at mid-cervical levels. Furthermore, we find that the cadherins Pcdh10, which is regulated by Pou3f1 and Hoxa5, and Cdh10, which is controlled by Pou3f1, are both mediators of like-like clustering of motor neuron cell bodies. This specific Pcdh10/Cdh10 activity might provide the means by which phrenic neurons are assembled into a distinct nucleus. Our study provides a framework for understanding how phrenic neuron identity is conferred and will help to generate this rare and inaccessible yet vital neuronal subtype directly from pluripotent stem cells, thus facilitating subsequent functional investigations.