During spinal cord development, oligodendrocytes originate in a discrete region of the ventral ventricular zone. What regulates this initial localization of oligodendrocyte precursors is unclear. Using a combination of notochord transplantations in vivo and co-culture experiments, we demonstrate that the origin of chick spinal cord oligodendrocytes is dependent on local influences from the notochord. In stage 10-12 dorsal chick spinal cord, Mab O4+ oligodendrocyte precursors were induced both in vivo by isochronic transplantation of an additional notochord adjacent to the dorsal neural tube and in vitro by co-culture of notochord and dorsal neural tube. Heterochronic transplantations demonstrated that the notochord was capable of inducing O4+ cells in adjacent neural tube until stage 12 and that the competence of the dorsal neural tube to respond to this inductive signal declined after stage 10. During normal development the ventral neural tube is competent to develop oligodendrocytes independent of the notochord by stage 10. The induction of oligodendrocytes by the notochord may either reflect a direct interaction or be mediated through other ventrally located cells such as the floor plate. In the majority of experimental animals the appearance of ectopic oligodendrocyte precursors was correlated with local floor plate formation.