We present evidence for a temporal control of GABAergic neurotransmitter specification in the basal forebrain orchestrated by the LIM-homeodomain factor Lhx7. In Xenopus, using in vivo overexpression experiments, we show that x-Lhx7 and x-Nkx2.1 inhibit GABAergic specification in the Dlx-expressing areas of the forebrain (subpallium and diencephalon). In addition, x-Lhx7 almost totally represses GABAergic differentiation at early but not late embryonic stages in subpallial mouse primary neurons in culture, indicating that x-Lhx7 is not able to withdraw the GABAergic phenotype once it is acquired. Moreover, anatomical data show striking correlations between x-Lhx7 expression and the GABAergic/cholinergic phenotypes. These functional and anatomical observations suggest a sequential role for x-Lhx7 in neurotransmitter specification. Thus, x-Lhx7 would first prevent a pool of cells to become GABAergic early in development and then promote cholinergic differentiation later on in this pool. We propose two distinct modulatory roles for a single LIM-hd factor, depending on the developmental time window.