The mammalian thalamus is an essential diencephalic derivative that plays unique roles in processing and relaying sensory and motor information to and from the cerebral cortex. The profile of transcription factors and lineage tracing experiments revealed a spatiotemporal relationship between diencephalic progenitor domains and discrete differentiated neurons contributing to thalamic nuclei. However, the precise molecular mechanisms by which heterogeneous thalamic neurons become specified and assemble into distinct thalamic nuclei are still poorly understood. Here, we show that a combinatorial interaction between the bHLH transcription factors Ascl1 and Helt is required for acquiring thalamic progenitor identity. Surprisingly, in the combined absence of Ascl1 and Helt, rostral thalamic progenitors (TH-R) adopt a molecular profile of a more rostral diencephalic derivative, the prethalamus. Furthermore, we show that the prethalamic factors Dlxs upregulated by Ascl1/Helt deficiency play unique roles in regulating thalamic progenitor specification, and that derepression of Dlx2 and Dlx5 suppress generation of TH-R neurons. Taken together, our results suggest a model whereby the combined activity of two distinct bHLH factors plays a key role in the development of discrete classes of thalamic interneurons.