There is great interest in the patterning and morphogenesis of the vertebrate nervous system, but the morphogenetic movements involved in early neural development and their underlying cellular mechanisms are poorly understood. This paper describes the cellular basis of the early neural morphogenesis of Xenopus laevis. The results have important implications for neural induction. Mapping the fate map of the midneurula (Eagleson and Harris: J. Neurobiol. 21:427-440, 1990) back to the early gastrula with time-lapse video recording demonstrates that the prospective hindbrain and spinal cord are initially very wide and very short, and thus at the beginning of gastrulation all their precursor cells lie within a few cell diameters of the inducing mesoderm. In the midgastrula, the prospective hindbrain and spinal cord undergo very strong convergence and extension movements in two phases: In the first phase they primarily undergo thinning in the radial direction and lengthening (extension) in the animal-vegetal direction, and the second phase is characterized primarily by mediolateral narrowing (convergence) and anterior-posterior lengthening (extension). These movements also occur in sandwich explants of the gastrula, thus demonstrating the local autonomy of the forces producing them. Tracing cell movements with fluorescein dextran-labeled cells in embryos or explants shows that the initial thinning and extension occurs by radial intercalation of deep cells to form fewer layers of greater area, all of which is expressed as increased length. The subsequent convergence and extension occurs by mediolateral intercalation of deep cells to form a longer, narrower array. These results establish that a similar if not identical sequence of radial and mediolateral cell intercalations underlie convergence and extension of the neural and the mesoderm tissues (Wilson and Keller: Development, 112:289-300, 1991). Moreover, these results establish that radial and mediolateral intercalation are the principal neural cell behaviors induced by the planar signals emanating from the dorsal involuting marginal zone (the Spemann organizer) in the early gastrula (Keller et al: Develop. Dynamics, 193: 218-234, 1992). Radial and mediolateral intercalation are induced among the 5 to 7 rows of cells comprising the prospective hindbrain and spinal cord, thus producing the massive convergence and extension movements that narrow and elongate these regions of the nervous system in the late gastrula. A more general significance of these results is that neural induction is best analyzed and understood in terms of the dynamics of the morphogenetic processes involved.