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The cortical hem was first described as a potential signaling center at the telencephalic midline because of an enriched expression of multiple members of the Wnt and Bmp families of morphogens, and its position at the border between the presumptive cortex and the choroid plexus. There is now definitive evidence that the cortical hem is an organizing center in the telencephalon, and that it instructs the formation of the hippocampus. In this review, we present an analysis of the molecular and cellular events that lead to the formation of the cortical hem, and define its position and extent in the telencephalon. This directly controls the positioning of the hippocampus within the telencephalon. We conclude with a summary of the current understanding of the role of the hem as the hippocampal organizer.