Vertebrate embryos display segmental patterns in many trunk structures, including somites and peripheral nervous system elements. Previous work in avian embryos suggests a role for somite-derived sclerotome in segmental patterning of the peripheral nervous system. We investigated sclerotome development and tested its role in patterning motor axons and dorsal root ganglia in embryonic zebrafish. Individual somite cells labeled with vital fluorescent dye revealed that some cells of a ventromedial cell cluster within each somite produced mesenchymal cells that migrated to positions expected for sclerotome. Individual somites showed anterior/posterior distinctions in several aspects of development: (1) anterior ventromedial cluster cells produced only sclerotome, (2) individual posterior ventromedial cluster cells produced both sclerotome and muscle, and (3) anterior sclerotome migrated earlier and along a more restricted path than posterior sclerotome. Vital labeling showed that anterior sclerotome colocalized with extending identified motor axons and migrating neural crest cells. To investigate sclerotome involvement in peripheral nervous system patterning, we ablated the ventromedial cell cluster and observed subsequent development of peripheral nervous system elements. Primary motor axons were essentially unaffected by sclerotome ablation, although in some cases outgrowth was delayed. Removal of sclerotome did not disrupt segmental pattern or development of dorsal root ganglia or peripheral nerves to axial muscle. We propose that peripheral nervous system segmentation is established through interactions with adjacent paraxial mesoderm which develops as sclerotome in some vertebrate species and myotome in others.