The hypothalamo-neurohypophysial system (HNS) is composed of hypothalamic magnocellular neurons and neural lobe pituicytes that accommodate the nerve terminals. Here we have investigated if the communication of the peptidergic neurons of the HNS with neighbouring cells plays a role in the development and assembly of the HNS. We employed munc18-1-deficient mice, which completely lack neurotransmitter secretion. Morphological and immunohistological analysis of the HNS in these mutant embryos during brain development showed that this peptidergic system was formed normally during early embryogenesis. However, the development arrested at embryonal day 14.5, the stage when terminal differentiation has to take place. The peptidergic neurons targeted axons in the correct direction, but few arrived at their final location and the neurons were not maintained in later stages. The pituicytes in the neural lobe of the pituitary were generated, but failed to organize normally. Our results indicate that peptide gene expression, axon outgrowth and migration are intrinsic developmental events in these peptidergic neurons, that are initiated in the munc18-1 null mutant. The further expansion and the integration of outgrowing axon terminals with neural lobe pituicytes requires munc18-1-dependent processes, probably exocytosis, at multiple levels. Firstly, to maintain and propagate neuronal outgrowth and guidance, and secondly, to control the cellular organization of the pituicytes. Thus, the communication between the outgrowing neurons and the pituicytes could serve to integrate these two cell types to constitute a functional peptidergic system.