Inductive factors are known to direct the regional differentiation of the vertebrate central nervous system (CNS) but their role in the specification of individual neuronal cell types is less clear. We have examined the function of GDF7, a BMP family member expressed selectively by roof plate cells, in the generation of neuronal cell types in the dorsal spinal cord. We find that GDF7 can promote the differentiation in vitro of two dorsal sensory interneuron classes, D1A and D1B neurons. In Gdf7-null mutant embryos, the generation of D1A neurons is eliminated but D1B neurons and other identified dorsal interneurons are unaffected. These findings show that GDF7 is an inductive signal from the roof plate required for the specification of neuronal identity in the dorsal spinal cord and that GDF7 and other BMP family members expressed by the roof plate have non-redundant functions in vivo. More generally, these results suggest that BMP signaling may have a prominent role in the assignment of neuronal identity within the mammalian CNS.