The first neurons in the vertebrate brain form a stereotypical array of longitudinal and transversal axon tracts, the early axon scaffold. This scaffold is thought to lay down the basic structure for the later, more complex neuronal pathways in the brain. The ventral longitudinal tract is pioneered by neurons located at the ventral midbrain–forebrain boundary, which form the medial longitudinal fascicle. Recent studies have shed some light on the molecular mechanisms that control the development of the medial longitudinal fascicle. Here, we show that patterning molecules, notably the ventralizing signalling molecule Shh, are involved in the formation of medial longitudinal fascicle neurons and in medial longitudinal fascicle axon guidance. Downstream of Shh, several homeobox genes are expressed in the tegmentum. We describe the expression patterns of Sax1, Emx2, Six3, Nkx2.2 and Pax6 in the mesencephalon and pretectum in detail. Furthermore, we review the evidence of their molecular interactions, and their involvement in neuronal fate specification. In particular, Sax1 plays a major role in fate determination of medial longitudinal fascicle neurons. Finally, we discuss the available data on axon guidance mechanisms for the medial longitudinal fascicle, which suggest that different guidance molecules such as class 3 Semaphorins, Slits and Netrins act to determine the caudal and ventral course of the medial longitudinal fascicle axons.