In the Drosophila embryonic central nervous system, neural stem cells, called neuroblasts, acquire fates in a position-specific manner. Recent work has identified a set of genes that functions along the dorsoventral axis to enable neuroblasts that develop in different dorsoventral domains to acquire distinct fates. These genes include the evolutionarily conserved transcription factors ventral nerve cord defective and intermediate neuroblasts defective, as well as the Drosophila EGF receptor. We show that the Sox-domain-containing gene Dichaete/fish-hook also plays a crucial role to pattern the neuroectoderm along the DV axis. Dichaete is expressed in the medial and intermediate columns of the neuroectoderm, and mutant analysis indicates that Dichaete regulates cell fate and neuroblast formation in these domains. Molecular epistasis tests, double mutant analysis and dosage-sensitive interactions demonstrate that during these processes, Dichaete functions in parallel with ventral nerve cord defective and intermediate neuroblasts defective, and downstream of EGF receptor signaling to mediate its effect on development. These results identify Dichaete as an important regulator of dorsoventral pattern in the neuroectoderm, and indicate that Dichaete acts in concert with ventral nerve cord defective and intermediate neuroblasts defective to regulate pattern and cell fate in the neuroectoderm.