Persistent ecotoxicants such as dioxin and PCBs are thought to pose one of the greatest threats to public and ecological health in the industrial world. These compounds cause a range of macroscopic malformations particularly to the craniofacial apparatus and cardiovascular system during vertebrate development. However, little is known about microscopic effects especially on the sensitive early life stages, or on the molecular basis of developmental neurotoxicity. Using zebrafish (Danio rerio) we have explored neurological deficits caused by early life exposure to environmentally-relevant concentrations of dioxin. We show using a quantitative stereological technique that 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD) substantially reduces the capacity for embryonic brain development, causing a 30% reduction in total neuronal number in the 168 h larval brain. Using transgenic GFP-expressing zebrafish lines we link this to decreased expression of key developmentally regulated genes, namely neurogenin and sonic hedgehog. This disruption of neuronal development provides the basis for understanding the neurotoxic effects of these compounds.