During brain development, Pax6 is expressed in specific regions of the diencephalon including secretory cells of the subcommissural organ (SCO), a circumventricular organ at the forebrain–midbrain boundary that originates from the pretectal dorsal midline neuroepithelial cells beneath the posterior commissure (PC). Homozygous small eye (Sey/Sey) mice lack functional Pax6 protein and fail to develop the SCO, a normal PC and the pineal gland. Small eye heterozygotes (Sey/+) show defective development of the SCO's basal processes which normally penetrate the PC, indicating that normal development of the gland requires normal Pax6 gene-dosage. A correlation between the defects of SCO formation and altered R- and OB-cadherin expression patterns in the SCO is observed in mutants suggesting a role for cadherins in SCO development.