The development of the nuclei of the hypothalamus was examined in normal and X‐irradiated embryos from day 13 (E13) to the day before birth (E22). The diencephalic neuroepithelium was subdivided into three lobes (dorsal, medial, and ventral) and two lobules (superior and inferior). The hypothalamus is derived from the ventral lobe and the inferior lobule. The ventral neuropithelial lobe generates the neurons of most of the early arising hypothalamic structures, including those of the lateral tier nuclei associated with the medial forebrain bundle, and the heterogeneous intermediate tier nuclei. A specialized neuroepithelial region lining the diamond shaped ventricle produces the early neurohypophysial magnocellular neurons; the neurons of the paraventricular nucleus remain at the site, whereas the neurons of the supraoptic nucleus could be traced migrating laterally. The neurons of the late arising hypophysiotropic area of the posterior hypothalamus are derived from components of the inferior neuroepithelial lobule: the dorsomedial and ventromedial nuclei apparently from a shared matrix in the main portion of the inferior lobule; the tuberomammillary‐arcuate complex from its posteroventral recess. The triple‐decked and sequentially produced components of the mammillary system may arise from separate neuroepithelial sites. The autoradiographic results of the previous study (Altman and Bayer, '78a) showed that the structural and functional heterogeneity of the mature hypothalamus is paralleled by cytogenetic heterochronicity; the present embryonic observations indicate that many of the distinguishable components of the hypothalamus arise from a mosaic of heterogeneous neuroepithelial sites.