Signals that induce neural cell fate in amniote embryos emanate from a unique cell population found at the anterior end of the primitive streak. Cells in this region express a number of fibroblast growth factors (FGFs), a group of secreted proteins implicated in the induction and patterning of neural tissue in the amphibian embryo. Here we exploit the large size and accessibility of the early chick embryo to analyse the function of FGF signalling specifically during neural induction. Our results demonstrate that extraembryonic epiblast cells previously shown to be responsive to endogenous neural-inducing signals express early posterior neural genes in response to local, physiological levels of FGF signal. This neural tissue does not express anterior neural markers or undergo neuronal differentiation and forms in the absence of axial mesoderm. Prospective mesodermal tissue is, however, induced and we present evidence for both the direct and indirect action of FGFs on prospective posterior neural tissue. These findings suggest that FGF signalling underlies a specific aspect of neural induction, the initiation of the programme that leads to the generation of the posterior central nervous system.