The forebrain, or prosencephalon, consists of the diencephalon and the telencephalon. The diencephalon is the conduit for ascending sensory information, whereas the telencephalon is the highest-order processor of neural function, and is consequently the most complex region of the nervous system. In this review, we discuss how fate restrictions, starting from the induction of neural character, result in the sequential specification of anterior neural tissue, forebrain and telencephalon, and finally dorsoventral patterning. Rather than relying on novel signalling pathways, the complexity of the mature brain seems to result from the unique ordering of signals used widely during development.