The diencephalon is composed primarily of the thalamus, hypothalamus and epithalamus, which together define the walls of the third ventricle. The thalami are two elongated, ovoid structures on either side of the midline that make contact in the middle.

The diencephalon has a central location within the human brain sitting just above the brain stem. It is divided into four main structures—the thalamus, hypothalamus, epithalamus, and subthalamus.

The largest and most significant part of the diencephalon is the thalamus, which is an ovoid gray matter structure that relays information from the cortex to the rest of the nervous system and vice versa.

The diencephalon is the region of the embryonic vertebrate neural tube that gives rise to anterior forebrain structures including the thalamus, hypothalamus, posterior portion of the pituitary gland, and the pineal gland. The diencephalon encloses a cavity called the third ventricle.