GABAergic neurons are the primary inhibitory cell type in the mature brain and their dysfunction is associated with important neurological conditions like schizophrenia and anxiety. We aimed to discover the underlying mechanisms for dorsal/ventral midbrain GABAergic neurogenesis. Previous work by us and others has provided crucial insights into the key function of Mgn and Mash1 genes in determining GABAergic neurotransmitter fate. Induction of dorsal midbrain GABAergic neurons does not take place at any time during development in either of the single mutant mice. However, GABAergic neurons in the ventral midbrain remained unchanged. Thus, the similarities in MB-GABAergic phenotype observed in the Mgn and Mash1 single mutants suggest the existence of other factors that take over the function of MGN and MASH1 in the ventral midbrain or the existence of different molecular mechanisms. We show that this process essentially depends on heterodimers and homodimers formed by MGN and MASH1 and deciphered the in vivo relevance of the interaction by phenotypic analysis of Mgn/Mash1 double knockout and compound mice. Furthermore, the combination of gain- and loss-of-function experiments in the developing midbrain showed co-operative roles for Mgn and Mash1 genes in determining GABAergic identity. Transcription factors belonging to the Enhancer-of-split-related and proneural families have long been believed to counterpart each other's function. This work uncovers a synergistic cooperation between these two families, and provides a novel paradigm for how these two families cooperate for the acquisition of MB-GABAergic neuronal identity. Understanding their molecular mechanisms is essential for cell therapy strategies to amend GABAergic deficits.