How do epithelial cells in developing skin accommodate the constantly growing embryo? Where do cells in skin appendages come from? Are they derivatives of a single appendage stem cell, or are they polyclonal? Here we analyze these issues in developing chicken skin using a replication-defective virus carrying beta-galactosidase and DiI microinjections. The results demonstrate that in early skin, epithelial cells labelled near the spine show a parallel linear stripe distribution pattern that is perpendicular to the midline of the trunk. This is similar to the human lines of Blaschko, a linear pattern on the skin, which many skin nevoid or acquired disorders follow. In later skin, feather buds form and contain a mixture of labeled and unlabeled cells, attesting to their polyclonal origin. When cells are traced for shorter time intervals, the labeled progeny appear to follow certain rules. The degree of cell dispersion and mixing increases with a longer incubation period between the time of labeling and detection. The spatial maturation sequence of skin appendages is not regulated by the order in which epithelial cells are generated. Epithelial cells at this developmental stage are pluripotent and competent to respond to new signals to assume appropriate fates according to their micro-environment. The results suggest that local interactions act upon the originally linearly deposited pluripotential epithelial cells to form skin appendages.