The thalamus is a symmetrical structure situated between the cerebral cortex and the midbrain. Anatomically it lies on top of the brain stem, near the center of the brain, in a position to be able to send nerve fibers out to the cerebral cortex. Functions of the thalamus include relaying sensation, special sense, motor signals to the cerebral cortex, sleep and alertness as well. The thalamus is the largest structure in the diencephalon.
The hypothalamus is the area of the brain that produces hormones that are responsible for functions including body temperature, hormones, mood, release of hormones, sex drive, and thirst. This particular area of the brain controls the pituitary glands in the body. Even though this part of the brain is small, it is involved in many necessary processes in the body such as behavioral, autonomic, and endocrine functions. The primary function of the hypothalamus is homeostasis. It is located in the middle of the base of the brain, right beside the optic chiasm.