It has been previously shown by chick/quail heterotopic grafts that En-2 expression and a mesencephalic phenotype can be induced within the avian primordial prosencephalic vesicle, although the induction appeared restricted to the caudal forebrain. The present experiments were aimed at further analyzing the competence of the prosencephalic neuroepithelium. Different types of grafts were performed between chick and quail embryos: (i) caudal forebrain grafts positioned in the midbrain/hindbrain junction (the En-2-positive domain); (ii) En-2-positive grafts integrated at different levels of the forebrain. In both cases, the grafts were transplanted either with a normal orientation or after inversion of their rostro-caudal axis. The chimeric embryos were analyzed at stages HH19-24 for expression of En-2 and Pax-6 homeobox-containing genes, normally expressed in the meso-isthmo-cerebellar and prosencephalic domains, respectively. A cytoarchitectonic analysis of grafted and surrounding host tissue was also performed at later developmental stages in chimeric embryos with caudal forebrain grafts. Our results show that the caudal diencephalon, including the prospective territories for prosomeres 1 and 2, is competent to express En-2 when in close contact to the En-2 polarizing region, whereas the more rostral neuroepithelium, including the prospective territories for the third prosomere and telencephalon, does not change its fate under similar conditions. The ectopic-induced neuroepithelium can develop mesencephalon, but also isthmus and cerebellum according to its site of integration rostrally or caudally to the mesencephalic/isthmo-cerebellar boundary. Our data also show that within the competent diencephalon, the induced En-2 expression can be arrested at the P1/P2 interneuromeric boundary. This arrest appears to be directionally oriented as it only takes place when the induction is produced within prosomere 1 but not when it comes from prosomere 2. These data can be considered as resulting from either a possible oriented permissiveness of cells which form the boundary separating prosomeres 1 and 2, or of a different permissiveness of the cells composing these two caudal prosomeres.