Numerous studies have identified the roof plate as an important signaling center controlling dorsal interneuron specification and differentiation in the developing spinal cord. Currently, the molecular pathways of roof plate formation and function are poorly understood. We determined that the LIM-homeodomain transcription factor Lmx1b is sufficient to induce functional roof plate in the early chick developing spinal cord. In the chick, Lmx1b acts upstream of Lmx1a in the roof plate developmental program. Once the roof plate forms, we show that Bmp and Wnt signaling are the major components of Lmx1a/b-dependent roof plate dorsal patterning activity. The roof plate function of Lmx1b is not conserved across vertebrates because Lmx1b is not expressed in mouse roof plate progenitors. Instead, mouse caudal CNS roof plate formation relies entirely on Lmx1a. Lmx1b can, however, partially rescue roof plate development in dreher (Lmx1a-/-) mice, indicating that Lmx1b has some functional redundancy to Lmx1a. Furthermore, we demonstrate that the roof plate-inducing activity of Lmx1b can be suppressed by Mash1 (Cash1), which is normally expressed in intermediate neural tube in both chick and mouse. Our data identify Lmx1b as a key regulator of spinal cord roof plate induction and function.