Abstract Background The forebrain consists of multiple structures necessary to achieve elaborate functions. Proper patterning is, therefore, a prerequisite for the generation of optimal functional areas. Only a few factors have been shown to control the genetic networks that establish early forebrain patterning. Results and conclusion Using conditional inactivation, we show that the transcription factor Sp8 has an essential role in the molecular and functional patterning of the developing telencephalon along the anteroposterior axis by modulating the expression gradients of Emx2 and Pax6. Moreover, Sp8 is essential for the maintenance of ventral cell identity in the septum and medial ganglionic eminence (MGE). This is probably mediated through a positive regulatory interaction with Fgf8 in the medial wall, and Nkx2.1 in the rostral MGE anlage, and independent of SHH and WNT signaling. Furthermore, Sp8 is required during corticogenesis to sustain a normal progenitor pool, and to control preplate splitting, as well as the specification of cellular diversity within distinct cortical layers.