The specification of neuronal cell types in the developing neural tube is orchestrated by signaling centers. However, how patterned territories of the central nervous system (CNS) are organized into structures with appropriate size and shape is still unclear. We report that in the absence of the mouse transcription factor mBtd/Sp8, a posterior shift of the isthmic organizer (IsO) occurs, suggesting a crucial role for Sp8 in this process. In addition, large patches of cells ectopically expressing Fgf8, Otx2 and/or Wnt1 in the rostral hindbrain are detected in Sp8 mutant embryos. In this context, midbrain dopaminergic neurons are found posterior to the IsO. Furthermore, we provide evidence that cell proliferation in the mid- and hindbrain is tightly controlled by Sp8 activity. Our observations are consistent with a role for Sp8 in restricting Fgf8 expression at the IsO.