Previous studies on neural induction have identified regionally localized inducing activities, signaling molecules, potential competence factors and various other features of this important, early differentiation event. In this paper, we have developed an improved model system for analyzing neural induction and patterning using transverse blastoderm isolates obtained from gastrulating chick embryos. We use this model to establish the timing of neural specification and the spatial distribution of perinodal cells having organizer activity. We show that a tissue that acts either as an organizer or as an inducer of an organizer is spatially co-localized with the prospective neuroectoderm immediately rostral to the primitive streak in the early gastrula. As the primitive streak elongates, this tissue with organizing activity and the prospective neuroectoderm rostral to the streak separate. Furthermore, we show that up to and through the mid-primitive streak stage (i.e., stage 3c/3+), the prospective neuroectoderm cannot self-differentiate (i.e., express neural markers and acquire neural plate morphology) in isolation from tissue with organizer activity. Signals from the organizer and from other more caudal regions of the primitive streak act on the rostral prospective neuroectoderm and the latter gains potency (i.e., is specified) by the fully elongated primitive streak stage (i.e., stage 3d). Transverse blastoderm isolates containing non-specified, prospective neuroectoderm provide an improved model system for analyzing early signaling events involved in neuraxis initiation and patterning.