By Dr Ananya Mandal, MD. The hypothalamus is a small but important part of the brain. It contains several small nuclei with a variety of functions. It plays an important role in the nervous system as well as in the endocrine system. It is linked to another small and vital gland called the pituitary gland.he hypothalamus is located below the thalamus and right above the brain stem. It forms the anterior part of the diencephalon. All vertebrate brains contain a hypothalamus. In humans, it is roughly the size of an almond.