|Cortical neurons must be specified and make the correct connections during development. Here, we examine a mechanism initiating neuronal circuit formation in the barrel cortex, a circuit comprising thalamocortical axons (TCAs) and layer 4 (L4) neurons. When Lhx2 is selectively deleted in postmitotic cortical neurons using conditional knockout (cKO) mice, L4 neurons in the barrel cortex are initially specified but fail to form cellular barrels or develop polarized dendrites. In Lhx2 cKO mice, TCAs from the thalamic ventral posterior nucleus reach the barrel cortex but fail to further arborize to form barrels. Several activity-regulated genes and genes involved in regulating barrel formation are downregulated in the Lhx2 cKO somatosensory cortex. Among them, Btbd3, an activity-regulated gene controlling dendritic development, is a direct downstream target of Lhx2. We find that Lhx2 confers neuronal competency for activity-dependent dendritic development in L4 neurons by inducing the expression of Btbd3.