The hypothalamus contains an astounding heterogeneity of neurons that regulate endocrine, autonomic, and behavioral functions. However, its molecular developmental trajectory and origin of neuronal diversity remain unclear. Here, we profile the transcriptome of 43,261 cells derived from Rax+ hypothalamic neuroepithelium to map the developmental landscape of the mouse hypothalamus and trajectory of radial glial cells (RGCs), intermediate progenitor cells (IPCs), nascent neurons, and peptidergic neurons. We show that RGCs adopt a conserved strategy for multipotential differentiation but generate Ascl1+ and Neurog2+ IPCs. Ascl1+ IPCs differ from their telencephalic counterpart by displaying fate bifurcation, and postmitotic nascent neurons resolve into multiple peptidergic neuronal subtypes. Clonal analysis further demonstrates that single RGCs can produce multiple neuronal subtypes. Our study reveals that multiple cell types along the lineage hierarchy contribute to fate diversification of hypothalamic neurons in a stepwise fashion, suggesting a cascade diversification model that deconstructs the origin of neuronal diversity.