The majority of the cortical cholinergic innervation implicated in attention and memory originates in the nucleus basalis of Meynert and in the horizontal limb of the diagonal band nucleus of the basal prosencephalon. Functional alterations in this system give rise to neuropsychiatric disorders as well as to the cognitive alterations described in Parkinson and Alzheimer's diseases. Despite the functional importance of these basal forebrain cholinergic neurons very little is known about their origin and development. Previous studies suggest that they originate in the medial ganglionic eminence of the telencephalic subpallium; however, our results identified Tbr1-expressing, reelin-positive neurons migrating from the ventral pallium to the subpallium that differentiate into cholinergic neurons in the basal forebrain nuclei projecting to the cortex. Experiments with Tbr1 knockout mice, which lack ventropallial structures, confirmed the pallial origin of cholinergic neurons in Meynert and horizontal diagonal band nuclei. Also, we demonstrate that Fgf8 signaling in the telencephalic midline attracts these neurons from the pallium to follow a tangential migratory route towards the basal forebrain.