The spinal cord is composed of anatomically distinct classes of neurons that perform sensory and motor functions. Because of its relative simplicity, the spinal cord has served as an important system for defining molecular mechanisms that contribute to the assembly of circuits in the central nervous system. At early embryonic stages, the neural tube contains multipotential cells whose identity becomes specified by cell-to-cell signaling. This review will focus on the progress made in understanding the transcriptional networks that become activated by these cell-cell interactions, with particular emphasis on the neurons that contribute to locomotor control. Remarkably, many of the transcription factors implicated in neuronal specification in the spinal cord are found to inhibit transcription, which has led to a 'derepression' model for cell fate specification in the developing spinal cord.