The role of the posterior hypothalamus in the development of the epithelial hypophysis was studied in Bufo embryos. In animals from which the central part of the neural plate (NP) had been surgically removed at the open neurula stage, the infundibulum did not develop, and the epithelial hypophysis was formed away from the normal site without morphological connection with the brain. Immunoreactive MSH cells and ACTH cells, i.e., the pituitary POMC cells, were not detected in any of the surgically treated animals, while other types of secretory cells (PRL, GH, TSH and GTH cells) were invariably present. In view of the fact that POMC cells originate in the anterior neural ridge, and not in the neural plate, the embryonic brain seems to exert an inductive influence upon the primordial pituitary POMC cells. Since these cells differentiate in a tail graft, isolated from the brain at a later stage (tail-bud stage), the inductive stimuli must be conveyed from/via the posterior hypothalamus to the pituitary anlage between the open neurula and the tail-bud stages.