The regionalization of the neural tube along the anteroposterior axis is established through the action of patterning signals from the endo-mesoderm including the organizer. These signals set up a pre-pattern which is subsequently refined through local patterning events. The midbrain-hindbrain junction, or isthmus, is endowed with such an organizing activity. It is able to induce graded expression of the Engrailed protein in the adjacent mesencephalon and rhombencephalon, and subsequently elicits the development of rectal and cerebellar structures. Ectopically grafted isthmus was also shown to induce Engrailed expression in diencephalon and otic and pre-otic rhombencephalon. Fgf8 is a signalling protein which is produced by the isthmus and which is able to mimic most isthmic properties. We show here that the isthmus, when transposed to the level of either rhombomere 8 or the spinal cord, loses its ability to induce Engrailed and cerebellar development in adjacent tissues. This is accompanied by the down-regulation of fgf8 expression in the grafted isthmus and by the up-regulation of a marker of the recipient site, Hoxb-4. Moreover, these changes in gene activity in the transplant are followed by a transformation of the fate of the grafted cells which adjust to their novel environment. These results show that the Tale of the isthmus is not determined at 10-somite stage and that the molecular loop of isthmic maintenance can be disrupted by exogenous signals. (C) 1999 Elsevier Science Ireland Ltd. All rights reserved.