Early neural development is a multistep process with morphologically distinct stages; however, the molecular events that underlie morphologic development are poorly understood. Retinoic acid (RA) was chosen as a teratogen to perturb development because this endogenous molecule is thought to play an integral role in normal neuraxis formation in many vertebrate species. We have examined the effects of RA on early neural patterning in the rat at three morphologically distinct stages: late streak, foregut pocket, and early somite. In this model exogenous RA exposure during mid-gastrulation (late streak stage) leads to severe disruption of anterior neural development as determined by morphologic and molecular (Engrailed [En] gene expression) markers. This disruption in anterior neural development is associated with excessive cell death in the hindbrain posterior to the En expression domain. In contrast, at the time the neural folds begin to elevate (foregut pocket stage) there is a dramatic reduction in the sensitivity of anterior neural development to exogenous RA as reflected by En expression and cell death patterns. These results suggest that we have identified a major transition in the development of the anterior neuraxis that is reflected in a transition in sensitivity to RA. This transition in sensitivity demonstrates that the fundamental patterning mechanisms that separate fore- and midbrain from hindbrain occurs very early in neurogenesis.