The neural ectoderm of vertebrates forms when the bone morphogenetic protein (BMP) signaling pathway is suppressed. Herein, we review the molecules that directly antagonize extracellular BMP and the signaling pathways that further contribute to reduce BMP activity in the neural ectoderm. Downstream of neural induction, a large number of "neural fate stabilizing" (NFS) transcription factors are expressed in the presumptive neural ectoderm, developing neural tube and ultimately in neural stem cells. Herein, we review what is known about their activities during normal development to maintain a neural fate and regulate neural differentiation. Further elucidation of how the NFS genes interact to regulate neural specification and differentiation should ultimately prove useful for regulating the expansion and differentiation of neural stem and progenitor cells.