Mesenchymal cell condensation in chick limb bud occurs at embryonic stage 22 and is the starting event of chondrogenesis. Several mechanisms have been proposed to have an active role in the induction of this process. Among them the establishment of cell-cell contacts represents a key event. Here we have investigated the modulation of N-CAM and N-cadherin gene expression in an in vitro culture system which allows chondrocyte differentiation to proceed from condensation of prechondrogenic cells to hypertrophic chondrocytes and eventually to osteoblast-like cells. Both Northern and Western blots demonstrated that they were developmentally regulated in differentiating chondrocytes. Both cell adhesion proteins were detectable in prechondrogenic cells, increased during cell aggregation, became undetectable in hypertrophic chondrocytes, and resulted in reexpression during their maturation to osteoblast-like cells. The timing of appearance of N-cadherin and N-CAM suggests that N-cadherin initiates the in vitro cell condensation thereafter stabilized by N-CAM. In agreement with the above findings, the immunolocalization of these molecules in the cell aggregates revealed that N-CAM and N-cadherin appear, after 12 h of suspension culture, on the surface of all cells at the membrane regions participating in cell-cell contacts. At 72 h N-CAM became restricted to cells at the aggregate periphery, while N-cadherin was detected both in type II collagen-negative and -positive regions. At this time of culture, electron microscopy shows a number of cell-cell contacts at the perifery of the cell aggregates, while only a few of them were observed in the aggregate interior. The expression of N-CAM and type II collagen by chondrocytes was mutually exclusive and a sorting out between differentiating and nondifferentiating cells occurred.