Amniote kidney tissue is derived from the intermediate mesoderm (IM), a strip of mesoderm that lies between the somites and the lateral plate. While much has been learned concerning the later events which regulate the differentiation of IM into tubules and other types of kidney tissue, much less is known concerning the earlier events which regulate formation of the IM itself. In the current study, the chick pronephros was used as a model system to identify tissues that play a role in patterning the IM and the critical time periods during which such patterning events take place. Explant studies revealed that the prospective pronephric IM is already specified to express kidney genes by stage 6, shortly after its gastrulation through the primitive streak, and earlier than previously reported. Transplant and explant experiments revealed that the lateral plate contains an activity that can repress IM formation in tissues that are already specified to express IM genes. In contrast, Hensen's node can promote formation of IM in the lateral plate. Paraxial tissues (presomitic mesoderm plus neural plate and notochord) were found to influence the morphogenesis of the nephric duct, but did not induce IM tissue to an appreciable extent. Combining lateral plate and paraxial tissue in vivo or in vitro led to induction of IM genes in the paraxial mesoderm but not in the lateral plate mesoderm. Based on these results and those of others, we propose a two-step model for the patterning of the IM. While tissue is still in the primitive streak, the prospective IM is relatively uncommitted. By stage 6, shortly after cells leave the primitive streak, a field of cells is generate which is specified to give rise to IM (Step 1). Subsequently, competing signals from the lateral plate and axial tissues modulate the number of cells that commit to an IM fate (Step 2).