The notochord normally arises from committed cells in the rostral tip of the primitive streak. After removal of these cells from the avian gastrula, embryos with notochords nevertheless develop in the majority of cases. A region required for the formation of this reconstituted notochord lies lateral to the primitive streak. In the present study we have determined that this region acts as an inducer for more lateral cells in the epiblast, which actually give rise to the reconstituted notochord. The strongest inducing region lies between 0-250 micrometer lateral to the streak and 500-750 micrometer caudal to the rostral end of the streak and chiefly contains cells normally fated to form lateral plate and somitic mesoderm. The responding region is located 250-500 micrometer lateral to the streak and 0-750 micrometer caudal to the rostral end of the streak. This area chiefly contains cells normally fated to form neural ectoderm, although cells normally fated to form lateral plate and somitic mesoderm are also within this area. The inducing and responding areas interact to form reconstituted notochord either when the primitive streak, including its rostral end (Hensen's node), is removed from the cultured blastoderm or when the inducer and responder are grafted together into an ectopic site. Grafting Hensen's node into isolates containing both inducer and responder blocks formation of reconstituted notochord, suggesting that Hensen's node suppresses formation of lateral notochords during normal development. These findings increase our understanding of the early interactions between mesoderm and ectoderm and provide a novel model system that is well defined and accessible for studying inductive events in higher vertebrates.