The developmental fate of the cephalic paraxial and prechordal mesoderm at the late neurula stage (3-somite) in the avian embryo has been investigated by using the isotopic, isochronic substitution technique between quail and chick embryos. The territories involved in the operation were especially tiny and the size of the transplants was of about 150 by 50 to 60 microns. At that stage, the neural crest cells have not yet started migrating and the fate of mesodermal cells exclusively was under scrutiny. The prechordal mesoderm was found to give rise to the following ocular muscles: musculus rectus ventralis and medialis and musculus oblicus ventralis. The paraxial mesoderm was separated in two longitudinal bands: one median, lying upon the cephalic vesicles (median paraxial mesoderm--MPM); one lateral, lying upon the foregut (lateral paraxial mesoderm--LPM). The former yields the three other ocular muscles, contributes to mesencephalic meninges and has essentially skeletogenic potencies. It contributes to the corpus sphenoid bone, the orbitosphenoid bone and the otic capsules; the rest of the facial skeleton is of neural crest origin. At 3-somite stage, MPM is represented by a few cells only. The LPM is more abundant at that stage and has essentially myogenic potencies with also some contribution to connective tissue. However, most of the connective cells associated with the facial and hypobranchial muscles are of neural crest origin. The more important result of this work was to show that the cephalic mesoderm does not form dermis. This function is taken over by neural crest cells, which form both the skeleton and dermis of the face. If one draws a parallel between the so-called "somitomeres" of the head and the trunk somites, it appears that skeletogenic potencies are reduced in the former, which in contrast have kept their myogenic capacities, whilst the formation of skeleton and dermis has been essentially taken over by the neural crest in the course of evolution of the vertebrate head.