The tremendous complexity of the adult forebrain makes it a challenging task to elucidate how this structure forms during embryonic development. Nevertheless, we are beginning to understand how a simple epithelial sheet of ectoderm gives rise to the labyrinthine network of cells that constitutes the functional forebrain. Here, we discuss early events in forebrain development--those that lead to the establishment of the anterior neural plate and the regional subdivision of this territory into the different domains of the prospective forebrain.