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The thalamus contains nuclei which communicate reciprocally with the cerebral cortex. Specific sensory nuclei receive incoming sensory information:

1) ventroposteromedial - pain, temperature, touch from the head, 2) ventroposterolateral - pain, temperature, touch from the body, 3) lateral geniculate - visual, 4) medial geniculate - auditory. After synapsing, these nuclei send sensory information to the appropriate cerebrocortical regions through the posterior limb of the internal capsule and its visual and auditory radiations. The anterior nucleus connects widely to the cingulate cortex and the medial-dorsal nucleus has reciprocal connections to the frontal lobe through the anterior limb of the internal capsule. Other nuclei transmit motor information; ventral anterior and ventral lateral nuclei carry cerebellar and basal gangliar in formation through the posterior limb of the internal capsule to motor areas of the cortex. Still other nuclei transmit to other regions of the cortex.

The hypothalamus is vaguely separated from the thalamus by the hypothalamic sulcus. It plays important roles in regulating water, fat, and carbohydrate metabolism, food intake, temperature control, vasomotor and visceromotor activities, and controls the release of pituitary hormones. The anterior hypothalamus lies dorsal to the optic chiasm, the posterior hypothalamus is approximately equivalent to the mammillary bodies, the tuberal region lies in between and connects to the pituitary via the infundibular stalk. From the medial temporal lobe, the fornix brings limbic system information to the mammillary bodies; the mammillothalamic tract connects the mammillary bodies to the anterior nucleus of the thalamus. The diffuse medial forebrain bundle passes from the frontal lobes, through the hypothalamus and into the balance of the brainstem. It is by these connections that the hypothalamus influences visceral and emotional behaviors.

The subthalamus includes the subthalamic nucleus and nearby associated fiber tracts related to the basal ganglia, and so is closely involved in motor activity. It is also close to the substantia nigra.

The compact anatomy of the diencephalon puts many structures and their associated functions in close proximity. Nearby is the internal capsule containing important motor and sensory tracts and connections from the thalamus to all lobes of the cortex. Therefore, even small lesions of the diencephalon produce complex mixtures of clinical signs and which may be hard to discern from cortical disease.