Abstract The mid/hindbrain junction region, which expresses Fgf8, can act as an organizer to transform caudal forebrain or hindbrain tissue into midbrain or cerebellar structures, respectively. FGF8-soaked beads placed in the chick forebrain can similarly induce ectopic expression of mid/hindbrain genes and development of midbrain structures (Crossley, P. H., Martinez, S. and Martin, G. R. (1996) Nature 380, 66-68). In contrast, ectopic expression of Fgf8a in the mouse midbrain and caudal forebrain using a Wnt1 regulatory element produced no apparent patterning defects in the embryos examined (Lee, S. M., Danielian, P. S., Fritzsch, B. and McMahon, A. P. (1997) Development 124, 959-969). We show here that FGF8b-soaked beads can not only induce expression of the mid/hindbrain genes En1, En2 and Pax5 in mouse embryonic day 9.5 (E9.5) caudal forebrain explants, but also can induce the hindbrain gene Gbx2 and alter the expression of Wnt1 in both midbrain and caudal forebrain explants. We also show that FGF8b- soaked beads can repress Otx2 in midbrain explants. Furthermore, Wnt1-Fgf8b transgenic embryos in which the same Wnt1 regulatory element is used to express Fgf8b, have ectopic expression of En1, En2, Pax5 and Gbx2 in the dorsal hindbrain and spinal cord at E10.5, as well as exencephaly and abnormal spinal cord morphology. More strikingly, Fgf8b expression in more rostral brain regions appears to transform the midbrain and caudal forebrain into an anterior hindbrain fate through expansion of the Gbx2 domain and repression of Otx2 as early as the 7- somite stage. These findings suggest that normal Fgf8 expression in the anterior hindbrain not only functions to maintain development of the entire mid/hindbrain by regulating genes like En1, En2 and Pax5, but also might function to maintain a metencephalic identity by regulating Gbx2 and Otx2 expression.