Holoprosencephaly (HPE) is the most common malformation of the forebrain, resulting from a failure to completely septate the left and right hemispheres at the rostral end of the neural tube. Because of the tissue interactions that drive head development, these forebrain defects are typically accompanied by midline deficiencies of craniofacial structures. Early events in setting up tissue precursors of the head, as well as later interactions between these tissues, are critical for normal head formation. Defects in either process can result in HPE. Signaling by bone morphogenetic proteins (BMPs), a family of secreted cytokines, generally plays negative roles in early stages of head formation, and thus must be attenuated in multiple contexts to ensure proper forebrain and craniofacial development. Chordin and Noggin are endogenous, extracellular antagonists of BMP signaling that promote the normal organization of the forebrain and face. Mouse mutants with reduced levels of both factors display mutant phenotypes remarkably analogous to the range of malformations seen in human HPE sequence. Chordin and Noggin function in part by antagonizing the inhibitory effects of BMP signaling on the Sonic hedgehog and Nodal pathways, genetic lesions in each being associated with human HPE. Study of Chordin;Noggin mutant mice is helping us to understand the molecular, cellular, and genetic pathogenesis of HPE and associated malformations.