During development of the cerebral cortex, the invasion of thalamic axons and subsequent differentiation of cortical neurons are tightly coordinated. Here we provide evidence that glutamate neurotransmission triggers a critical signaling mechanism involving the activation of phospholipase C-beta1 (PLC-beta1) by metabotropic glutamate receptors (mGluRs). Homozygous null mutation of either PLC-beta1 or mGluR5 dramatically disrupts the cytoarchitectural differentiation of 'barrels' in the mouse somatosensory cortex, despite segregation in the pattern of thalamic innervation. Furthermore, group 1 mGluR-stimulated phosphoinositide hydrolysis is dramatically reduced in PLC-beta1(-/-) mice during barrel development. Our data indicate that PLC-beta1 activation via mGluR5 is critical for the coordinated development of the neocortex, and that presynaptic and postsynaptic components of cortical differentiation can be genetically dissociated.