During gastrulation in vertebrates, dorsal ectoderm is induced to form neural tissue that later gives rise to the brain and spinal cord. This induction depends on signals arising from a group of cells on the dorsal side of the gastrula. This group of cells constitutes the organizer. It is thought that the organizer initially induces neural tissue with anterior, or forebrain, character, and that other signals subsequently posteriorize neural tissue in the trunk. Here we show that development of the anterior central nervous system of the zebrafish embryo also depends on a small group of ectodermal cells located in the prospective head region. Removal of these ectodermal cells during gastrulation perturbs subsequent neural patterning and results in widespread cell death. Transplantation of these cells shows that they can induce forebrain-specific gene expression in more posterior regions of the neural plate. Our results indicate that an early step in neural patterning is the establishment of a small population of signalling cells within the most anterior region of the embryo. These cells are required for patterning and survival of the anterior brain.