During the development of the zebrafish nervous system both noi, a zebrafish pax2 homolog, and ace, a zebrafish fgf8 homolog, are required for development of the midbrain and cerebellum. Here we describe a dominant mutation, aussicht (aus), in which the expression of noi and ace is upregulated. In aus mutant embryos, ace is upregulated at many sites in the embryo, while noi expression is only upregulated in regions of the forebrain and midbrain which also express ace. Subsequent to the alterations in noi and ace expression, aus mutants exhibit defects in the differentiation of the forebrain, midbrain and eyes. Within the forebrain, the formation of the anterior and postoptic commissures is delayed and the expression of markers within the pretectal area is reduced. Within the midbrain, En and wnt1 expression is expanded. In heterozygous aus embryos, there is ectopic outgrowth of neural retina in the temporal half of the eyes, whereas in putative homozygous aus embryos, the ventral retina is reduced and the pigmented retinal epithelium is expanded towards the midline. The observation that aus mutant embryos exhibit widespread upregulation of ace raised the possibility that aus might represent an allele of the ace gene itself. However, by crossing carriers for both aus and ace, we were able to generate homozygous ace mutant embryos that also exhibited the aus phenotype. This indicated that aus is not tightly linked to ace and is unlikely to be a mutation directly affecting the ace locus. However, increased Ace activity may underly many aspects of the aus phenotype and we show that the upregulation of noi in the forebrain of aus mutants is partially dependent upon functional Ace activity. Conversely, increased ace expression in the forebrain of aus mutants is not dependent upon functional Noi activity. We conclude that aus represents a mutation involving a locus normally required for the regulation of ace expression during embryogenesis.