Patterning of the embryonic ectoderm is dependent upon the action of negative (antineural) and positive (neurogenic) transcriptional regulators. Msx1 and Dlx3 are two antineural genes for which the anterior epidermal-neural boundaries of expression differ, probably due to differential sensitivity to BMP signaling in the ectoderm. In the extreme anterior neural plate, Dlx3 is strongly expressed while Msx1 is silent. While both of these factors prevent the activation of genes specific to the nascent central nervous system, Msx1 inhibits anterior markers, including Otx2 and cement gland-specific genes. Dlx3 has little, if any, effect on these anterior neural plate genes, instead providing a permissive environment for their expression while repressing more panneural markers, including prepattern genes belonging to the Zic family and BF-1. These properties define a molecular mechanism for translating the organizer-dependent morphogenic gradient of BMP activity into spatially restricted gene expression in the prospective anterior neural plate.