The midbrain reticular formation (MRF) is a mosaic of diverse GABAergic and glutamatergic neurons that have been associated with a variety of functions, including sleep regulation. However, the molecular characteristics and development of MRF neurons are poorly understood. As the transcription factor, Gata2 is required for the development of all GABAergic neurons derived from the embryonic mouse midbrain, we hypothesized that the genes expressed downstream of Gata2 could contribute to the diversification of GABAergic neuron subtypes in this brain region. Here, we show that Gata2 is required for the expression of several GABAergic lineage-specific transcription factors, including Nkx2-2 and Skor2, which are co-expressed in a restricted group of post-mitotic GABAergic precursors in the MRF. Both Gata2 and Nkx2-2 function is required for Skor2 expression in GABAergic precursors. In the adult mouse and rat midbrain, Nkx2-2-and Skor2-expressing GABAergic neurons locate at the boundary of the ventrolateral periaqueductal gray and the MRF, an area containing REM-off neurons regulating REM sleep. In addition to the characteristic localization, Skor2+ cells increase their activity upon REM-sleep inhibition, send projections to the dorsolateral pons, a region associated with sleep control, and are responsive to orexins, consistent with the known properties of midbrain REM-off neurons.