The past year has seen significant progress in the analysis of transcriptional regulation as it relates to neural development. Highlights include the identification and analysis of new homeobox genes that delimit developmental boundaries in the vertebrate forebrain, the study of upstream regulators of homeobox genes, the analysis of Pax genes that may contribute to specification of the vertebrate dorso-ventral neuraxis, and the functional analysis of transcription factors that are likely to specify particular neural cell types in both vertebrate and invertebrate nervous systems.