The thymus and parathyroid glands in mice develop from a thymus/parathyroid primordium that forms from the endoderm of the third pharyngeal pouch. We investigated the molecular mechanisms that promote this unique process in which two distinct organs form from a single primordium, using mice mutant for Hoxa3 and Pax1. Thymic ectopia in Hoxa3^+/−Pax1^−/− compound mutants is due to delayed separation of the thymus/parathyroid primordium from the pharynx. The primordium is hypoplastic at its formation, and has increased levels of apoptosis. The developing third pouch in Hoxa3^+/−Pax1^−/− compound mutants initiates normal expression of the parathyroid-specificGcm2 and thymus-specific Foxn1 genes. However, Gcm2 expression is reduced at E11.5 in Pax1^−/− single mutants, and further reduced or absent in Hoxa3^+/−Pax1^−/− compound mutants. Subsequent to organ-specific differentiation from the shared primordium, both the parathyroids and thymus developed defects. Parathyroids in compound mutants were smaller at their formation, and absent at later stages. Parathyroids were also reduced in Pax1^−/− mutants, revealing a new function forPax1 in parathyroid organogenesis. Thymic hypoplasia at later fetal stages in compound mutants was associated with increased death and decreased proliferation of thymic epithelial cells. Our results suggest that a Hoxa3–Pax1 genetic pathway is required for both epithelial cell growth and differentiation throughout thymus and parathyroid organogenesis.