A central problem in development is how fates of closely related cells are segregated. Lineally related motoneurons (MNs) and interneurons (INs) express many genes in common yet acquire distinct fates. For example, in mouse and chick Lhx3 plays a pivotal role in the development of both cell classes. Here, we utilize the ability to recognize individual zebrafish neurons to examine the roles of Lhx3 and its paralog Lhx4 in the development of MNs and ventral INs. We show that Lhx3 and Lhx4 are expressed by post-mitotic axial MNs derived from the MN progenitor (pMN) domain, p2 domain progenitors and by several types of INs derived from pMN and p2 domains. In the absence of Lhx3 and Lhx4, early-developing primary MNs (PMNs) adopt a hybrid fate, with morphological and molecular features of both PMNs and pMN-derived Kolmer-Agduhr' (KA') INs. In addition, we show that Lhx3 and Lhx4 distinguish the fates of two pMN-derived INs. Finally, we demonstrate that Lhx3 and Lhx4 are necessary for the formation of late-developing V2a and V2b INs. In conjunction with our previous work, these data reveal that distinct transcription factor families are deployed in post-mitotic MNs to unequivocally assign MN fate and suppress the development of alternative pMN-derived IN fates.