Telencephalic patterning centers, defined by the discrete expression domains of distinct morphogens, Fgfs in the commissural plate (CoP), Wnts and Bmps in the cortical hem, and a ventral domain of Sonic hedgehog (Shh), are postulated to establish during development the initial patterning of the telencepahlon, including the neocortex. We show that the expression patterns of Sp5, Sp8, and Sp9, members of the Sp8-like family that are homologues of Drosophila buttonhead, correlate during early embryonic development with these three telencephalic patterning centers. To study potential functional relationships, we focused on Sp8, because it is transiently expressed in the CoP coincident with the expression of Fgf8, a morphogen implicated in area patterning of the neocortex. We also show that Sp8 is expressed in cortical progenitors in a high to low anterior-medial to posterior-lateral gradient across the ventricular zone. We used in utero electroporation of full-length and chimeric expression constructs to perform gain-of-function and loss-of-function studies of interactions between Sp8 and Fgf8 and their roles in cortical area patterning. We show that Fgf8 and Sp8 exhibit reciprocal induction in vivo in the embryonic telencephalon. Sp8 also induces downstream targets of Fgf8, including ETS transcription factors. In vitro assays show that Sp8 binds Fgf8 regulatory elements and is a direct transcriptional activator of Fgf8. We also show that Sp8 induction of Fgf8 is repressed by Emx2 in vitro, suggesting a mechanism to limit Fgf8 expression to the CoP. In vivo expression of a dominant negative Sp8 in the CoP indicates that Sp8 maintains expression of Fgf8 and also its effect on area patterning. Ectopic expression of Sp8 in anterior or posterior cortical poles induces significant anterior or posterior shifts in area patterning, respectively, paralleled by changes in expression of gene markers of positional identity. These effects of Sp8 on area patterning oppose those induced by ectopic expression of Fgf8, suggesting that in parallel to regulating Fgf8 expression, Sp8 also activates a distinct signaling pathway for cortical area patterning. In summary, Sp8 and Fgf8 robustly induce one another, and may act to balance the anterior-posterior area patterning of the cortex.