We have made a detailed analysis of cell behaviour using high resolution time-lapse microscopy of the earliest cellular interactions taking place during morphogenesis of the notochord and somites in intact teleost embryos. Notochord formation is typified by active intercalation of paraxial mesenchyme cells into the lateral surfaces of the primordium. Following this recruitment phase, complete immiscibility develops between cells of the notochord and the presomitic mesenchyme. Dorso-ventral and rostro-caudal expansion of the notochord is characterised by translocation of cells within dorso-ventral planes of section and is supported by elongation of the remaining cells and reduction in width across its latero-medial axis. A lateral palisading of paraxial mesenchyme against the lateral aspects of the notochord precedes overt segmentation. Intersomitic furrows form by localised de-adhesion at small foci at the nascent intersomitic planes, which are consolidated by coalescence of such areas by de-adhesion to produce the interface. It is not possible to predict precisely where cells would initiate de-adhesion since there is a stochastic element to the phenomenon. Once formed, boundaries between somites are stable and provide no opportunity for mixing, except across the first formed furrow, which disintegrates at the 4-6 somite stage. The first ten somites form at a constant rate of 2.3 somites/hr, during which time we recorded constant relative displacement of the segmental plate against the rostro-caudally elongating notochord. Unlike teleost epiboly and gastrulation, no large-scale movements of individual cells can be detected during elaboration of the embryonic axis.