The arachnoid barrier, a component of the blood-cerebrospinal fluid barrier (B-CSFB) in the meninges, is composed of epithelial-like, tight-junction-expressing cells. Unlike other central nervous system (CNS) barriers, its' developmental mechanisms and timing are largely unknown. Here, we show that mouse arachnoid barrier cell specification requires the repression of Wnt-β-catenin signaling and that constitutively active β-catenin can prevent its formation. We also show that the arachnoid barrier is functional prenatally and, in its absence, a small molecular weight tracer and the bacterium group B Streptococcus can cross into the CNS following peripheral injection. Acquisition of barrier properties prenatally coincides with the junctional localization of Claudin 11, and increased E-cadherin and maturation continues after birth, where postnatal expansion is marked by proliferation and re-organization of junctional domains. This work identifies fundamental mechanisms that drive arachnoid barrier formation, highlights arachnoid barrier fetal functions, and provides novel tools for future studies on CNS barrier development.