Formation of the long bones requires a cartilage template. Cartilage formation (chondrogenesis) proceeds through determination of cells and their aggregation into prechondrogenic condensations, differentiation into chondrocytes, and later maturation. Several studies indicate that members of the bone morphogenetic protein (BMP) family promote cartilage formation, but the exact step(s) in which BMPs are involved during this process remains undefined. To resolve this issue, we have used a retroviral vector to misexpress the BMP antagonist Noggin in the embryonic chick limb. Unlike previous reports, we have characterized the resulting phenotype in depth, analyzing histological and early chondrogenic markers, as well as the patterns of cell death and proliferation. Misexpression of Noggin prior to the onset of chondrogenesis leads to the total absence of skeletal elements, as previously reported (J. Capdevila and R. L. Johnson, 1998, Dev. Biol. 197, 205–217). Noggin inhibits cartilage formation at two distinct steps. First, we demonstrate that mesenchymal cells do not aggregate into prechondrogenic condensations, and additional results suggest that these cells persist in an undifferentiated state. Second, we show that differentiation of chondroprogenitors into chondrocytes can also be blocked, concurrent with expanded expression of a presumptive joint region marker. In addition, we observed alterations in muscle and tendon morphogenesis, and the potential role of BMPs in these processes will be discussed. Our studies therefore provide in vivo evidence that BMPs are necessary for different steps of chondrogenesis: chondroprogenitor determination and/or condensation and subsequent differentiation into chondrocytes.