The establishment of the diencephalon has been described. We have seen that with the great enlargement of the telencephalon, the diencephalon comes to lie on the medial side of the cerebral hemisphere. The lateral wall of the diencephalon is subdivided by the appearance of the epithalamic and hypothalamic sulci. The central part lying between the two sulci enlarges to form the thalamus. The part above the epithalamic sulcus remains small and forms the epithalamus which is represented by the habenular nuclei and the pineal body. The part below the hypothalamic sulcus forms the hypothalamus.