In vivo imaging applications typically require carefully balancing conflicting parameters. Often it is necessary to achieve high imaging speed, low photo-bleaching, and photo-toxicity, good three-dimensional resolution, high signal-to-noise ratio, and excellent physical coverage at the same time. Light-sheet microscopy provides good performance in all of these categories, and is thus emerging as a particularly powerful live imaging method for the life sciences. We see an outstanding potential for applying light-sheet microscopy to the study of development and function of the early nervous system in vertebrates and higher invertebrates. Here, we review state-of-the-art approaches to live imaging of early development, and show how the unique capabilities of light-sheet microscopy can further advance our understanding of the development and function of the nervous system. We discuss key considerations in the design of light-sheet microscopy experiments, including sample preparation and fluorescent marker strategies, and provide an outlook for future directions in the field.