Mouse embryos bearing hypomorphic and conditional null Fgf8mutations have small and abnormally patterned telencephalons. We provide evidence that the hypoplasia results from decreased Foxg1 expression,reduced cell proliferation and increased cell death. In addition, alterations in the expression of Bmp4, Wnt8b, Nkx2.1 and Shh are associated with abnormal development of dorsal and ventral structures. Furthermore, nonlinear effects of Fgf8 gene dose on the expression of a subset of genes, including Bmp4 and Msx1, correlate with a holoprosencephaly phenotype and with the nonlinear expression of transcription factors that regulate neocortical patterning. These data suggest that Fgf8 functions to coordinate multiple patterning centers, and that modifications in the relative strength of FGF signaling can have profound effects on the relative size and nature of telencephalic subdivisions.