The choroid plexus in the brain is unique because it is a non-neural secretory tissue. It secretes the cerebrospinal fluid and functions as a blood-brain barrier, but the precise mechanism of specification of this non-neural tissue has not yet been determined. Using mouse embryos and lineage-tracing analysis, we found that the prospective choroid plexus region initially gives rise to Cajal-Retziuscells, specialized neurons that guide neuronal migration. Inactivation of the bHLH repressor genes Hes1, Hes3 and Hes5 upregulated expression of the proneural gene neurogenin 2 (Ngn2) and prematurely depleted Bmp-expressing progenitor cells, leading to enhanced formation of Cajal-Retzius cells and complete loss of choroid plexus epithelial cells. Overexpression of Ngn2 had similar effects. These data indicate that Hes genes promote specification of the fate of choroid plexus epithelial cells rather than the fate of Cajal-Retzius cells by antagonizing Ngn2 in the dorsal telencephalic midline region, and thus this study has identified a novel role for bHLH genes in the process of deciding which cells will have a non-neural versus a neural fate.