In the developing brain, the production of neurons from multipotent precursors must be carefully regulated in order to generate the appropriate numbers of various differentiated neuronal types. Inductive signals from extrinsic elements such as growth factors need to be integrated with timely expression of intrinsic elements such as transcription factors that define the competence of the cell. The transcriptional Mediator complex offers a mechanism to coordinate the timing and levels of intrinsic and extrinsic influences by acting as a rapid molecular switch for transcription of poised RNA pol II. The epithalamus is a highly conserved region of the vertebrate brain that differentiates early and rapidly in the zebrafish. It includes the pineal and parapineal organs and the habenular nuclei. Mutation of the Mediator complex subunit Med12 impairs the specification of habenular and parapineal neurons and causes a loss of differentiation in pineal neurons and photoreceptors. Although FGF ligands and transcription factors for parapineal and photoreceptor development are still expressed in the pineal complex of med12 mutants, FGF signaling is impaired and transcription factor expression is reduced and/or delayed. We find that the timely expression of one of these transcription factors, tbx2b, is controlled by Med12 and is vital for parapineal specification. We propose that the Mediator complex is responsible for subtle but significant changes in transcriptional timing and amplitude that are essential for coordinating the development of neurons in the epithalamus.