Deficiencies in the homeobox transcription factors LHX4 and PROP1 cause pituitary hormone deficiency in both humans and mice. Lhx4 and Prop1 mutants exhibit severe anterior pituitary hypoplasia resulting from limited differentiation and expansion of most specialized cell types. Little is known about the mechanism through which these genes promote pituitary development. In this study we determined that the hypoplasia in Lhx4 mutants results from increased cell death and that the reduced differentiation is attributable to a temporal shift in Lhx3 activation. In contrast, Prop1 mutants exhibit normal cell proliferation and cell survival but show evidence of defective dorsal-ventral patterning. Molecular genetic analyses reveal that Lhx4 and Prop1 have overlapping functions in early pituitary development. Double mutants exhibit delayed corticotrope specification and complete failure of all other anterior pituitary cell types to differentiate. Thus, Lhx4 and Prop1 have critical, but mechanistically different roles in specification and expansion of specialized anterior pituitary cells.