DLX1 and/or DLX2 activated the transcription of both <i>Gad</i> genes, and defects in <i>Dlx</i> function disrupted the differentiation of GABAergic interneurons with global reduction in GABA levels in the forebrains of the <i>Dlx1/Dlx2</i> double knock-out mouse <i>in vivo</i> Identification of <i>Gad</i> genes as direct <i>Dlx</i> transcriptional targets is significant; it extends our understanding of <i>Dlx</i> gene function in the developing forebrain beyond the regulation of tangential interneuron migration to the differentiation of GABAergic interneurons arising from the basal telencephalon, and may help to unravel the pathogenesis of several developmental brain disorders.<b>SIGNIFICANCE STATEMENT</b> GABA is the major inhibitory neurotransmitter in the brain.