Proper dorsal-ventral patterning in the developing central nervous system requires signals from both the dorsal and ventral portions of the neural tube. Data from multiple studies have demonstrated that bone morphogenetic proteins (BMPs) and Sonic hedgehog protein are secreted factors that regulate dorsal and ventral specification, respectively, within the caudal neural tube. In the developing rostral central nervous system Sonic hedgehog protein also participates in ventral regionalization; however, the roles of BMPs in the developing brain are less clear. We hypothesized that BMPs also play a role in dorsal specification of the vertebrate forebrain. To test our hypothesis we implanted beads soaked in recombinant BMP5 or BMP4 into the neural tube of the chicken forebrain. Experimental embryos showed a loss of the basal telencephalon that resulted in holoprosencephaly (a single cerebral hemisphere), cyclopia (a single midline eye), and loss of ventral midline structures. In situ hybridization using a panel of probes to genes expressed in the dorsal and ventral forebrain revealed the loss of ventral markers with the maintenance of dorsal markers. Furthermore, we found that the loss of the basal telencephalon was the result of excessive cell death and not a change in cell fates. These data provide evidence that BMP signaling participates in dorsal-ventral patterning of the developing brain in vivo, and disturbances in dorsal-ventral signaling result in specific malformations of the forebrain.