Correct patterning of the developing brain is crucial importance for accurate wiring and function. Although the adult brain contains many complex structures, it begins with a simple structure—the neural tube. As it develops, the neural tube is divided into several regions, including the telencephalon, diencephalon, midbrain, and hindbrain. In each of these regions, signaling molecules are secreted from discrete zones, which establish positional information and regulate regional growth. There are many mechanistic questions that remain to be resolved about the action of these growth and differentiation factors. The cellular factors mediating patterning in response to these factors are largely unknown. Furthermore, identical differentiation factors are expressed in different regions of the brain and yet control significantly different patterning mechanisms, and the factors that control region-specific responses to these factors are mostly obscure. Furthermore, differentiation factors also show dramatically different expression patterns in different vertebrate species that may underlie changes in brain structure, but the mechanisms by which these changes in gene expression occur poorly understood. To address these issues, we discuss the role of Fgf8, which controls anterior/posterior patterning in different regions of the developing brain. We also discuss how modifications of Fgf8 expression in the diencephalon controlled by retrotransposons can change the shape and function of the brain in various species.