The formation of the central nervous system is one of the most fascinating processes in biology. Motor coordination, sensory perception and memory all depend on the complex cell connections that form with extraordinary precision between distinct nerve cell types within the central nervous system. The development of the central nervous system and its intricate connections occurs in several steps. During the first step known as neural induction, the neural plate forms as a uniform sheet of neuronal progenitors. Neural induction is followed by neurulation, the process in which the two halves of the neural plate are transformed into a hollow tube. Neurulation is accompanied by regionalisation of the neural tube anterior-posteriorly into the brain and spinal cord and dorso-ventrally into neural crest cells and numerous classes of sensory and motor neurons. The proper development of the vertebrate central nervous system requires the precise, finely balanced control of cell specification and proliferation, which is achieved through the complex interplay of multiple signaling systems. Bone morphogenetic proteins (BMPs), retinoic acid (RA) fibroblast growth factors (FGFs), Wnt and Hedgehog proteins are a few key factors that interact to pattern the developing central nervous system. In this review, we detail our current knowledge of the roles of these signaling factors in the development of the vertebrate nervous system in terms of the mechanisms underlying the formation and specification of the hindbrain and spinal cord.