A series of gain- or loss-of-function experiments performed in different vertebrate species have demonstrated that the Engrailed genes play multiple roles during brain development. In particular, they have been implicated in the determination of the mid/hindbrain domain, in cell proliferation and survival, in neurite formation, tissue polarization and axonal pathfinding. We have analyzed the consequences of a local gain of En function within or adjacent to the endogenous expression domain in mouse and chick embryos. In WEXPZ.En1 transgenic mice (Danielian, P. S. and McMahon, A. P. (1996) Nature 383, 332-334) several genes are induced as a consequence of ectopic expression of En1 in the diencephalic roof (but in a pattern inconsistent with a local di- to mes-encephalon fate change). The development of several structures with secretory function, generated from the dorsal neuroepithelium, is severely compromised. The choroid plexus, subcommissural organ and pineal gland either fail to form or are atrophic. These defects are preceded by an increase in cell death at the dorsal midline. Comparison with the phenotype of Wnt1^sw/sw (swaying) mutants suggests that subcommissural organ failure is the main cause of prenatal hydrocephalus observed in both strains. The formation of the posterior commissure is also delayed, and errors in axonal pathfinding are frequent. In chick, ectopic expression of En by in ovo electroporation, affects growth and differentiation of the choroid plexus.