The formation of the vertebrate central nervous system depends on a series of inductive interactions. Ventral ectoderm gives rise to epidermis (skin), whereas dorsal ectoderm forms neurectoderm which is regionalized along the anteroposterior axis in response to inductive signals from dorsal mesoderm. Specific neural cell types are established along be dorsoventral axis of the neural tube by inductive signals from the dorsal mesoderm and prospective epidermis. We review the induction and patterning of the nervous system, with an emphasis on molecules that might play a role in these interactions.