The epiphysial region of the dorsal diencephalon is the first site at which neurogenesis occurs in the roof of the zebrafish forebrain. We show that the homeobox containing gene floating head (flh) is required for neurogenesis to proceed in the epiphysis. In flh- embryos, the first few epiphysial neurons are generated, but beyond the 18 somite stage, neuronal production ceases. In contrast, in masterblind- (mbl-) embryos, epiphysial neurons are generated throughout the dorsal forebrain. We show that mbl is required to prevent the expression of flh in dorsal forebrain cells rostral to the epiphysis. Furthermore, epiphysial neurons are not ectopically induced in mbl-/flh- embryos, demonstrating that the epiphysial phenotype of mbl- embryos is mediated by ectopic Flh activity. We propose a role for Flh in linking the signaling pathways that regulate regional patterning to the signaling pathways that regulate neurogenesis.