We present the first in vivo study of the long-term fate and potential of early-migrating and late-migrating mesencephalic neural crest cell populations, by performing isochronic and heterochronic quail-to-chick grafts. Both early- and late-migrating populations form melanocytes, neurons, glia, cartilage and bone in isochronic, isotopic chimeras, showing that neither population is lineage-restricted. The early-migrating population distributes both dorsally and ventrally during normal development, while the late-migrating population is confined dorsally and forms much less cartilage and bone. When the late-migrating population is substituted heterochronically for the early-migrating population, it contributes extensively to ventral derivatives such as jaw cartilage and bone. Conversely, when the early-migrating population is substituted heterochronically for the late-migrating population, it no longer contributes to the jaw skeleton and only forms dorsal derivatives. When the late-migrating population is grafted into a late-stage host whose neural crest had previously been ablated, it migrates ventrally into the jaws. Thus, the dorsal fate restriction of the late-migrating mesencephalic neural crest cell population in normal development is due to the presence of earlier-migrating neural crest cells, rather than to any change in the environment or to any intrinsic difference in migratory ability or potential between early- and late-migrating cell populations. These results highlight the plasticity of the neural crest and show that its fate is determined primarily by the environment.