Animal evolution is closely linked to the emergence of the nervous system. At present it is unknown how the basic mechanisms of neural induction and formation of central nervous systems evolved. We addressed this question in Nematostella vectensis, a member of cnidarians, the ancient sister group of bilaterians. We found that β-catenin signalling is crucial for the early induction of the embryonic nervous system. β-Catenin activity at the blastopore induces specific neurogenic genes required for development of the oral nervous system. β-Catenin signalling induces also Bmp signalling, which, at later larval stages, becomes indispensible for the maintenance and asymmetric patterning of the oral nervous system along the primary and secondary (directive) axes. We hypothesize that the consecutive and functionally linked involvement of β-catenin and Bmp signalling in the formation of the cnidarian oral nervous system reflects an ancestral mechanism that evolved before the cnidarian/bilaterian split.