The spatial distribution of the cranial paraxial mesoderm and the neural crest cells during craniofacial morphogenesis of the mouse embryo was studied by micromanipulative cell grafting and cell labelling. Results of this study show that the paraxial mesoderm and neural crest cells arising at the same segmental position share common destinations. Mesodermal cells from somitomeres I, III, IV and VI were distributed to the same craniofacial tissues as neural crest cells of the forebrain, the caudal midbrain, and the rostral, middle and caudal hindbrains found respectively next to these mesodermal segments. This finding suggests that a basic meristic pattern is established globally in the neural plate ectoderm and paraxial mesoderm during early mouse development. Cells from these two sources mixed extensively in the peri-ocular, facial, periotic and cervical mesenchyme. However, within the branchial arches a distinct segregation of these two cell populations was discovered. Neural crest cells colonised the periphery of the branchial arches and enveloped the somitomere-derived core tissues on the rostral, lateral and caudal sides of the arch. Such segregation of cell populations in the first three branchial arches is apparent at least until the 10.5-day hindlimb bud stage and could be important for the patterning of the skeletal and myogenic derivatives of the arches.