Current evidence suggests that the anterior segment of the vertebrate hindbrain, rhombomere 1, gives rise to the entire cerebellum. It is situated where two distinct developmental patterning mechanisms converge: graded signalling from an organising centre (the isthmus) located at the midbrain/hindbrain boundary confronts segmentation of the hindbrain. The unique developmental fate of rhombomere 1 is reflected by it being the only hindbrain segment in which no Hox genes are expressed. In this study we show that ectopic FGF8 protein, a candidate for the isthmic organising activity, is able to induce and repress gene expression within the hindbrain in a manner appropriate to rhombomere 1. Using a heterotopic, heterospecific grafting strategy we demonstrate that rhombomere 1 is able to express Hox genes but that both isthmic tissue and FGF8 inhibit their expression. Inhibition of FGF8 function in vivo shows that it is responsible for defining the anterior limit of Hox gene expression within the developing brain and thereby specifies the extent of the r1 territory. Previous studies have suggested that a retinoid morphogen gradient determines the axial limit of expression of individual Hox genes within the hindbrain. We propose a model whereby activation by retinoids is antagonised by inhibition by FGF8 in the anterior hindbrain to set aside the territory from which the cerebellum will develop.