Recent studies indicate that one of the major functions of the apical ectodermal ridge (AER) of the embryonic chick limb bud is to maintain mesenchymal cells directly subjacent to it (i.e. cells extending 0·4–0·5 mm from the AER), in a labile, undifferentiated condition, and that when mesenchymal cells are freed from the AER's influence either artificially or as a result of normal polarized proximal to distallimb outgrowth, they are freed to commence cyto-differentiation. In a preliminary attempt to investigate at a molecular level the mechanism by which the AER exerts its ‘negative’ effect on the cytodifferentiation of subjacent mesenchymal cells, we haveexamined the effect of a variety of agents that elevate cyclic AMP levels on the morphogenesis and differentiation of the unspecialized subridge mesoderm in an organ culture system. In vitro in the presence of the AER, undifferentiated subridge mesoderm explants undergo remarkably normal morphogenesis characterized primarily by progressive polarized proximal to distal outgrowth and changes in the contour of the developing explant. In the presence of cyclic AMP derivatives, explants fail to undergo the polarized outgrowth and contour changes characteristic of control explants. In fact, in the presence of dibutyryl-cyclic AMP and theophylline, AER-directed morphogenesis essentially ceases during the first day of culture. The cessation of AER-directed morphogenesis inthe presence of cyclic AMP derivatives is accompanied by the histochemically and biochemically detectable precocious chondrogenic differentiation of the subridge mesenchymal cells. In control explants, cartilage differentiation only occurs in those proximal cellsof the explant which gradually become located greater than 0·4–0·5 mm from the AER. In contrast, in the presence of cyclic AMP derivatives, cartilage differentiation by cells within 0·4–0·5 mm of the AER is detectable from the first day of culture, and by the third day cartilage formation has occurred throughout the entire explant. Overall, these results indicate that elevating the cyclic AMP content of the subridge mesenchymal cells enables the cells to overcome negative influences on cytodifferentiation and the positive influences on morphogenesis being imposed upon them by the AER. On the basis of this observation and previous studies, a testable model on the role of cyclic AMP in limb morphogenesis and differentiation is proposed.