This review considers the hypothesis that the limb bud ectoderm establishes the initial pattern of the various mesodermal components within the limb bud. The evidence reviewed supports the hypothesis that the ectoderm establishes a peripheral, non-chondrogenic, avascular sleeve around the limb bud. The ectodermal influence is a diffusible factor that acts by altering the collagenous extracellular matrix so that cell flattening and fibrogenic differentiation are promoted. It is hypothesized that just within this sleeve is a vascular-rich zone where myogenic cells migrate in response to a chemotactic influence. In the center of the limb bud is the prechondrogenic core, whose size determines the number of skeletal elements which subsequently form. The dimensions of the developing limb bud are established during distal limb outgrowth by the reciprocal interaction between the apical ectodermal ridge, which has a mitogenic influence, and the underlying mesoderm.