Vertebrate circadian rhythms are organized by the hypothalamic suprachiasmatic nucleus (SCN). Despite its physiological importance, SCN development is poorly understood. Here, we show that Lim homeodomain transcription factor 1 (Lhx1) is essential for terminal differentiation and function of the SCN. Deletion of Lhx1 in the developing SCN results in loss of SCN-enriched neuropeptides involved in synchronization and coupling to downstream oscillators, among other aspects of circadian function. Intact, albeit damped, clock gene expression rhythms persist in Lhx1-deficient SCN; however, circadian activity rhythms are highly disorganized and susceptible to surprising changes in period, phase, and consolidation following neuropeptide infusion. Our results identify a factor required for SCN terminal differentiation. In addition, our in vivo study of combinatorial SCN neuropeptide disruption uncovered synergies among SCN-enriched neuropeptides in regulating normal circadian function. These animals provide a platform for studying the central oscillator's role in physiology and cognition.