The Arx transcription factor is expressed in the developing ventral telencephalon and subsets of its derivatives. Mutation of human ARX ortholog causes neurological disorders including epilepsy, lissencephaly, and mental retardation. We have isolated the mouse Arx endogenous enhancer modules that control its tightly compartmentalized forebrain expression. Interestingly, they are scattered downstream of its coding region and partially included within the introns of the downstream PolA1 gene. These enhancers are ultraconserved noncoding sequences that are highly conserved throughout the vertebrate phylum. Functional characterization of the Arx GABAergic enhancer element revealed its strict dependence on the activity of Dlx transcription factors. Dlx overexpression induces ectopic expression of endogenous Arx and its isolated enhancer, whereas loss of Dlx expression results in reduced Arx expression, suggesting that Arx is a key mediator of Dlx function. To further elucidate the mechanisms involved, a combination of gain-of-function studies in mutant Arx or Dlx tissues was pursued. This analysis provided evidence that, although Arx is necessary for the Dlx-dependent promotion of interneuron migration, it is not required for the GABAergic cell fate commitment mediated by Dlx factors. Although Arx has additional functions independent of the Dlx pathway, we have established a direct genetic relationship that controls critical steps in the development of telencephalic GABAergic neurons. These findings contribute elucidating the genetic hierarchy that likely underlies the etiology of a variety of human neurodevelopmental disorders.