The bHLH-PAS transcription SIM1 is required for the development of all neurons of the paraventricular nucleus (PVN) and supraoptic nucleus (SON) of the hypothalamus. Mice with a loss of Sim1 die within a few days of birth, presumably because of the lack of a PVN and SON. In contrast, mice with a decrease of Sim1 survive, are hyperphagic and become obese. The mechanism by which Sim1 controls food intake remains unclear. Here we show that the development of specific PVN and SON cell types is sensitive to Sim1 gene dosage. Sim1 haploinsufficiency reduces the number of vasopressin (AVP)- and oxytocin-producing cells in the PVN by about 50 and 80%, respectively, but does not affect the development of Crh, Trh and Ss neurons. A decrease of AVP-producing cells increases the sensitivity of Sim1 heterozygous mice to chronic dehydration. Moreover, retrograde labelling showed a 70% reduction of PVN neurons projecting to the dorsal vagal complex, raising the possibility that a decrease of these axons contributes to the hyperphagia of Sim1(+/-) mice. Sim1 haploinsufficiency is thus associated with a decrease of several PVN/SON cell types, which has the potential of affecting distinct homeostatic processes.