Stem cell engineering and grafting of mesencephalic dopamine (mesDA) neurons is a promising strategy for brain repair in Parkinson's disease (PD). Refinement of differentiation protocols to optimize this approach will require deeper understanding of mesDA neuron development. Here, we studied this process using transcriptome-wide single-cell RNA sequencing of mouse neural progenitors expressing the mesDA neuron determinant Lmx1a. This approach resolved the differentiation of mesDA and neighboring neuronal lineages and revealed a remarkably close relationship between developing mesDA and subthalamic nucleus (STN) neurons, while also highlighting a distinct transcription factor set that can distinguish between them. While previous hESC mesDA differentiation protocols have relied on markers that are shared between the two lineages, we found that application of these highlighted markers can help to refine current stem cell engineering protocols, increasing the proportion of appropriately patterned mesDA progenitors. Our results, therefore, have important implications for cell replacement therapy in PD.