Embryonic stem (ES) cells are pluripotent and can differentiate into every cell type of the body. Next to their potential in regenerative medicine, they are excellent tools to study embryonic development. In this work the processes of neural induction and neural patterning along the antero-posterior (A/P) body axis are studied and evidence suggests a two step mechanism for these events. First, neural induction occurs by default in the primitive ectoderm, forming anterior neural tissue and thereafter, a series of factors can posteriorize this anterior neurectoderm. In a gain-of-function/loss-of-function approach using mouse ES cells, we show that Fgf2 has the strongest caudalizing potential of all Fgfs tested. Furthermore, Bmp4 and Wnt3a, but not Wnt1, can caudalize the neurectodermal cells. The effect of the antagonists of these factors was also examined and though Dkk1 and Noggin clearly have an effect that opposes that of Wnt3a and Bmp4 respectively, they fail to anteriorize the neurectoderm. The patterning effect of SU5402, an Fgf receptor inhibitor, was rather limited. These data confirm that in the mouse, two steps are involved in neural patterning and we show that while Fgf4, Fgf8 and Wnt1 have no strong patterning effect, Fgf2, Wnt3a and Bmp4 are strong posteriorizing factors.