Neural induction represents the earliest step in the determination of ectodermal cell fates. In vertebrates, bone morphogenetic proteins (BMPs) act as signals of epidermal induction. The inhibition of the BMP signalling pathway in the ectoderm is the hallmark of neural-fate acquisition, and forms the basis of the default model of neural induction. BMP inhibition seems to take place through distinct mechanisms in different vertebrate species, including transcriptional regulation of BMP gene expression and clearance of BMP ligands by secreted inhibitors. Here, we discuss the role of fibroblast growth factors and Wnt proteins in neural induction and in the regulation of BMP signalling in the ectoderm of Xenopus laevis and chick embryos. In addition, we discuss evidence from mouse embryonic stem cells that supports the default model of neural induction and the role of BMP signalling in ectodermal fate determination.