Patterning of the vertebrate neural tube depends on intercellular signals emanating from sources such as the notochord and the floor plate. The secreted protein Sonic hedgehog and the extracellular matrix protein Vitronectin are both expressed in these signalling centres and have both been implicated in the generation of ventral neurons. The proteolytic processing of Sonic hedgehog is fundamental for its signalling properties. This processing generates two secreted peptides with all the inducing activity of Shh residing in the highly conserved 19 kDa amino-terminal peptide (N-Shh). Here we show that Vitronectin is also proteolitically processed in the embryonic chick notochord, floor plate and ventral neural tube and that this processing is spatiotemporally correlated with the generation of motor neurons. The processing of Vitronectin produces two fragments of 54 kDa and 45 kDa, as previously described for Vitronectin isolated from chick yolk. The 45 kDa fragment lacks the heparin-binding domain and the integrin-binding domain, RGD, present in the non-processed Vitronectin glycoprotein. Here we show that N-Shh binds to the three forms of Vitronectin (70, 54 and 45 kDa) isolated from embryonic tissue, although is preferentially associated with the 45 kDa form. Furthermore, in cultures of dissociated neuroepithelial cells, the combined addition of N-Shh and Vitronectin significantly increases the extent of motor neuron differentiation, as compared to the low or absent inducing capabilities of either N-Shh or Vitronectin alone. Thus, we conclude that the differentiation of motor neurons is enhanced by the synergistic action of N-Shh and Vitronectin, and that Vitronectin may be necessary for the proper presentation of the morphogen N-Shh to one of its target cells, the differentiating motor neurons.