Transforming growth factor-beta (TGFbeta) signalling, particularly signalling from the bone morphogenetic protein (BMP) members of this protein family, is crucial for the development of both the central and peripheral nervous systems in vertebrates. Experimental embryology and genetics performed in a range of organisms are providing insights into how BMPs establish the neural tissue and control the types and numbers of neurons formed. These studies also highlight the interactions between different developmental signals that are necessary to form a functional nervous system. The challenges ahead will be to uncover functions of TGFbeta signalling in later stages of CNS development, as well as to determine possible associations with neurological diseases.