The vertebrate hindbrain is subdivided into segments, termed neuromeres, that are units of gene expression, cell differentiation and behavior. A key property of such segments is that cells show a restricted ability to mix across segment borders -- termed lineage restriction. In order to address segmentation in the midbrain-hindbrain boundary (mhb) region, we have analyzed single cell behavior in the living embryo by acquiring time-lapse movies of the developing mhb region in a transgenic zebrafish line. We traced the movement of hundreds of nuclei, and by matching their position with the expression of a midbrain marker, we demonstrate that midbrain and hindbrain cells arise from two distinct cell populations. Single cell labeling and analysis of the distribution of their progeny shows that lineage restriction is probably established during late gastrulation stages. Our findings suggest that segmentation as an organizing principle in early brain development can be extended to the mhb region. We argue that lineage restriction serves to constrain the position of the mhb organizer cell population.