Bone morphogenetic protein (BMP) signaling is known to be involved in multiple inductive events during embryogenesis including the development of amniote skin. Here, we demonstrate that early application of BMP-2 to the lateral trunk of chick embryos induces the formation of dense dermis, which is competent to participate in feather development. We show that BMPs induce the dermis markers Msx-1 and cDermo-1 and lead to dermal proliferation, to expression of beta-catenin, and eventually to the formation of ectopic feather tracts in originally featherless regions of chick skin. Moreover, we present a detailed analysis of cDermo-1 expression during early feather development. The data implicate that cDermo-1 is located downstream of BMP in a signaling pathway that leads to condensation of dermal cells. The roles of BMP and cDermo-1 during development of dermis and feather primordia are discussed.