The specification of distinct neural cell types in central nervous system development crucially depends on positional cues conferred to neural stem cells in the neuroectoderm. Here, we investigate the regulation and function of the epidermal growth factor receptor (EGFR) signalling pathway in early development of the Drosophila brain. We find that localized EGFR signalling in the brain neuroectoderm relies on a neuromere-specific deployment of activating (Spitz, Vein) and inhibiting (Argos) ligands. Activated EGFR controls the spatially restricted expression of all dorsoventral (DV) patterning genes in a gene- and neuromere-specific manner. Further, we reveal a novel role of DV genes-ventral nervous system defective (vnd), intermediate neuroblast defective (ind), Nkx6-in regulating the expression of vein and argos, which feed back on EGFR, indicating that EGFR signalling stands not strictly atop the DV patterning genes. Within this network of genetic interactions, Vnd acts as a positive EGFR feedback regulator. Further, we show that EGFR signalling becomes dependent on single-minded-expressing midline cells in the posterior brain (tritocerebrum), but remains midline-independent in the anterior brain (deuto- and protocerebrum). Finally, we demonstrate that activated EGFR controls the proper formation of brain neuroblasts by regulating the number, survival and proneural gene expression of neuroectodermal progenitor cells. These data demonstrate that EGFR signalling is crucially important for patterning and early neurogenesis of the brain.