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.