The neural crest is an embryonic cell population that originates at the border between the neural plate and the prospective epidermis. Around the time of neural tube closure, neural crest cells emigrate from the neural tube, migrate along defined paths in the embryo and differentiate into a wealth of derivatives. Most of the craniofacial skeleton, the peripheral nervous system, and the pigment cells of the body originate from neural crest cells. This cell type has important clinical relevance, since many of the most common craniofacial birth defects are a consequence of abnormal neural crest development. Whereas the migration and differentiation of the neural crest have been extensively studied, we are just beginning to understand how this tissue originates. The formation of the neural crest has been described as a classic example of embryonic induction, in which specific tissue interactions and the concerted action of signaling pathways converge to induce a multipotent population of neural crest precursor cells. In this review, we summarize the current status of knowledge on neural crest induction. We place particular emphasis on the signaling molecules and tissue interactions involved, and the relationship between neural crest induction, the formation of the neural plate and neural plate border, and the genes that are upregulated as a consequence of the inductive events. Birth Defects Research (Part C) 72:109–123, 2004. © 2004 Wiley-Liss, Inc.