The vertebrate brain is anatomically and functionally asymmetric; however, the molecular mechanisms that establish left-right brain patterning are largely unknown. In zebrafish, asymmetric left-sided Nodal signaling within the developing dorsal diencephalon is required for determining the direction of epithalamic asymmetries. Here, we show that Six3, a transcription factor essential for forebrain formation and associated with holoprosencephaly in humans, regulates diencephalic Nodal activity during initial establishment of brain asymmetry. Reduction of Six3 function causes brain-specific deregulation of Nodal pathway activity, resulting in epithalamic laterality defects. Based on misexpression and genetic epistasis experiments, we propose that Six3 acts in the neuroectoderm to establish a prepattern of bilateral repression of Nodal activity. Subsequently, Nodal signaling from the left lateral plate mesoderm alleviates this repression ipsilaterally. Our data reveal a Six3-dependent mechanism for establishment of correct brain laterality and provide an entry point to understanding the genetic regulation of Nodal signaling in the brain.