Group B Sox-domain proteins encompass a class of conserved DNA-binding proteins expressed from the earliest stages of metazoan CNS development. In all higher organisms studied to date, related Group B Sox proteins are co-expressed in the developing CNS; in vertebrates there are three (Sox1, Sox2 and Sox3) and in Drosophila there are two (SoxNeuro and Dichaete). It has been suggested there may be a degree of functional redundancy in Sox function during CNS development. We describe the CNS phenotype of a null mutation in the Drosophila SoxNeuro gene and provide the first direct evidence for both redundant and differential Sox function during CNS development in Drosophila. In the lateral neuroectoderm, where SoxNeuro is uniquely expressed, SoxNeuro mutants show a loss or reduction of achaete expression as well as a loss of many correctly specified lateral neuroblasts. By contrast, in the medial neuroectoderm, where the expression of SoxNeuro and Dichaete overlaps, the phenotypes of both single mutants are mild. In accordance with an at least partially redundant function in that region, SoxNeuro/Dichaete double mutant embryos show a severe neural hypoplasia throughout the central nervous system, as well as a dramatic loss of achaete expressing proneural clusters and medially derived neuroblasts. However, the finding that Dichaete and SoxN exhibit opposite effects on achaete expression within the intermediate neuroectoderm demonstrates that each protein also has region-specific unique functions during early CNS development in the Drosophila embryo.