During embryonic development a variety of tissues and organs such as the lung, eye, and kidney are being formed. The generation of functional organs is regulated by reciprocal cell-cell interactions. Via the secretion of soluble molecules one type of cells affect the fate of their neighboring cells. A central issue in organogenesis is how a cell interprets such extrinsic signals and adopts a specific fate, and how the cell in response to this signal establishes reciprocal signaling. Transcription factors play a critical role in this process and my thesis focuses on the role of the LIM-homeodomain transcription factor, Lhx2, in the development of three different organ systems, the liver, the hematopoietic system and the olfactory system. The liver is formed from endoderm of the ventral foregut and mesenchyme of the septum transversum (st) and its development depends upon signaling interactions between these two tissues. As the liver becomes a distinct organ it is colonized by hematopoietic cells and serves as hematopoietic organ until birth. The fetal liver provides a microenvironment that supports the expansion of the entire hematopoietic system (HS) including the hematopoietic stem cells (HSCs). Liver development in Lhx2-/- embryos is disrupted leading to a lethal anemia due to insufficient support of hematopoiesis. To further investigate the role of Lhx2 in liver development I analyzed gene expression from the Lhx2 locus during liver development in wild-type and Lhx2-/- mice. Lhx2 is expressed in the liver associated st mesenchymal cells that become integrated in the liver and contribute to a subpopulation of hepatic stellate cells in adult liver. Lhx2 is not required for the formation of these mesenchymal cells, suggesting that the phenotype in Lhx2-/- livers is due to the presence of defective mesenchymal cells. The putative role of Lhx2 in the expansion of the HS was examined by introducing Lhx2 cDNA into embryonic stem cells differentiated in vitro. This approach allowed for the generation of immortalized multipotent hematopoietic progenitor cell (HPC) lines that share many characteristics with normal HSCs. The Lhx2-dependent generation of HSC-like cell lines suggests that Lhx2 plays a role in the maintenance and/or expansion of the HS. To isolate genes putatively linked to Lhx2 function, genes differentially expressed in the HPC lines were isolated using a cDNA subtraction approach. This allowed for the identification of a few genes putatively linked to Lhx2 function, as well as several stem cell-specific genes. The antagonist of Wnt signalling, Dickkopf-1 (Dkk-1), was identified in the former group of genes as it showed a similar expression pattern in the fetal liver, as that of Lhx2 and expression of Dkk-1 in fetal liver and in HPC lines appeared to be regulated by Lhx2. This suggests that Dkk-1 plays a role in liver development and/or HSC physiology during embryonic development. During development of the olfactory epithelium (OE) neuronal progenitors differentiate into mature olfactory sensory neurons (OSNs) that are individually specified into over a thousand different subpopulations, each expressing a unique odorant receptor (OR) gene. The expression of Lhx2 in olfactory neurons suggested a potential role for Lhx2 in the development of OSNs. To address this OE from Lhx2-/- and wild-type mice was compared. In the absence of functional Lhx2 neuronal differentiation was arrested prior to onset of OR expression. Lhx2 is thus required for the development of OSN progenitors into functional, individually specified OSNs. Thus, Lhx2 trigger a variety of cellular responses in different organ systems that play important roles in organ development in vivo and stem cell expansion in vitro.