Early during its development, the vertebrate brain is subdivided into regions that have distinct fates and correlate with the expression domains of regulatory genes, but little is known about the cell-cell interactions that establish this spatial pattern. Candidates for regulating such interactions are the Eph-related receptor tyrosine kinases (RTKs) which have spatially restricted expression in the developing brain. These RTKs may mediate cell-contact-dependent signalling by interacting with membrane-bound ligands, and have been implicated in axon repulsion and the segmental restriction of gene expression in the hindbrain, but nothing is known regarding their function in the rostral neural epithelium. Here we use a dominant-negative approach in the zebrafish embryo to interfere with the function of Rtk1, an Eph-related RTK expressed in the developing diencephalon. We find that expression of a truncated receptor leads to expansion of the eye field into diencephalic territory and loss of diencephalic structures, indicating a role for Rtk1 in patterning the developing forebrain.