Fgf8 is expressed in the isthmic region of the developing brain, serving an organizing function in vertebrate embryos. We previously identified S4.2 downstream to the zebrafish fgf8 gene as a regulatory region that drives transcription in the anterior hindbrain. Here, we investigated the mechanism of fgf8 regulation by the S4.2 region during development. Reporter analyses in embryos revealed that S4.2 closely recapitulates fgf8 expression in the anteriormost hindbrain during somitogenesis. This region contains a sequence highly conserved in fgf8 of diverse vertebrates. Further analyses of S4.2 revealed a 342-bp core region composed of three subregions (#2, #3, and #4). Regions #3 and #4 drove expression broadly in the brain from the midbrain to r5 of the hindbrain, whereas a 28-bp sequence in #2 repressed ectopic expression in the midbrain and in r2 to r5. The enhancer function of S4.2 was absent in pax2a mutant embryos, while it was activated ectopically by pax2a misexpression in the hindbrain. We identified two sites in the core region that are bound by Pax2a in vitro and in vivo, the disruption of which abrogated the S4.2 activity. Thus, fgf8 expression in the anteriormost hindbrain involves activation and repression, with Pax2a as a pivotal regulator.