The neural crest is a stem population critical for development of the vertebrate craniofacial skeleton and peripheral ganglia. Neural crest cells originate along the border between the neural plate and epidermis, migrate extensively and generate numerous derivatives, including neurons and glia of the peripheral nervous system, melanocytes, bone and cartilage of the head skeleton. Impaired neural crest development is associated with human defects, including cleft palate. Classically, the neural crest has been thought to form by interactions at the border between neural and non-neural ectoderm or mesoderm, and defined factors such as bone morphogenetic proteins (BMPs) and Wnt proteins have been postulated as neural crest-inducers. Although competence to induce crest cells declines after stage 10 (ref. 14), little is known about when neural crest induction begins in vivo. Here we report that neural crest induction is underway during gastrulation and well before proper neural plate appearance. We show that a restricted region of chick epiblast (stage 3-4) is specified to generate neural crest cells when explanted under non-inducing conditions. This region expresses the transcription factor Pax7 by stage 4 + and later contributes to neural folds and migrating neural crest. In chicken embryos, Pax7 is required for neural crest formation in vivo, because blocking its translation inhibits expression of the neural crest markers Slug, Sox9, Sox10 and HNK-1. Our results indicate that neural crest specification initiates earlier than previously assumed, independently of mesodermal and neural tissues, and that Pax7 has a crucial function during neural crest development.