Defined fragments of the anterolateral neural ridge and of the associated region of the neural plate of presomitic to three-somite stage quail embryos were grafted isotopically and isochronically into chick hosts. This resulted in the development of apparently normal brain and facial structures to which the contribution of the grafted tissue could be observed by means of the quail nuclear marker. It was shown that the anterolateral neural ridge contains the progenitor cells of the adenohypophyseal and olfactory placodes and also of the superficial ectoderm lining the nasal cavity and conchae and the superficial ectoderm of the beak. When the appropriate region of the neural ridge was involved in the quail-chick substitution, the egg tooth was made up of graft-derived cells. Grafting of the neural plate area adjacent to the "ridge" territory containing the placodal ectoderm revealed that the presumptive region of the hypothalamus is in contiguity with that of the adenohypophyseal placode. The same observation was made for the olfactory placode and the floor of the telencephalon from which the olfactive bulb later develops.