Little is known about the cellular and molecular mechanisms that determine neuronal cell fate and the patterning of neuronal connections in the vertebrate central nervous system. In this paper we summarize evidence which indicates that some aspects of neuronal differentiation and axon guidance are regulated by specialized epithelial cells that occupy the medial region of the neural plate and, later, the ventral midline of the spinal cord. This cell group, termed the notoplate/floor plate appears to constitute a distinct compartment within the neural plate that is more closely related in lineage and perhaps also in function to axial mesodermal cells of the underlying notochord than to other neural plate cells. Cells of the notoplate exhibit specialized mechanical and adhesive properties that may contribute to neurulation. At later stages of development, the floor plate appears to guide developing axons in the embryonic spinal cord by releasing a diffusible chemoattractant factor and by virtue of its specialized cell surface properties. The floor plate may also play a role in the determination of cell identity and patterning at earlier stages of neural tube development.