Prader-Willi syndrome (PWS) is a complex genetic disorder characterized by hyperphagia, obesity and hypogonadotrophic hypogonadism, all highly suggestive of hypothalamic dysfunction. The NDN gene, encoding the MAGE family protein, necdin, maps to the PWS chromosome region and is highly expressed in mature hypothalamic neurons. Adult mice lacking necdin have reduced numbers of gonadotropin-releasing hormone (GnRH) neurons, but the mechanism for this reduction is unknown. Herein, we show that, although necdin is not expressed in an immature, migratory GnRH neuronal cell line (GN11), high levels are present in a mature GnRH neuronal cell line (GT1-7). Furthermore, overexpression of necdin activates GnRH transcription through cis elements bound by the homeodomain repressor Msx that are located in the enhancer and promoter of the GnRH gene, and knock-down of necdin expression reduces GnRH gene expression. In fact, overexpression of Necdin relieves Msx repression of GnRH transcription through these elements and necdin co-immunoprecipitates with Msx from GnRH neuronal cells, indicating that necdin may activate GnRH gene expression by preventing repression of GnRH gene expression by Msx. Finally, necdin is necessary for generation of the full complement of GnRH neurons during mouse development and extension of GnRH axons to the median eminence. Together, these results indicate that lack of necdin during development likely contributes to the hypogonadotrophic hypogonadal phenotype in individuals with PWS.