The HMG‐domain transcription factor Sox9 is a known regulator of the type II collagen gene, a major developmentally regulated protein of cartilage. In order to place Sox9 function in skeletogenesis we have investigated the regulation and misexpression of Sox9 in avian embryos. Application of exogenous BMP2 to chick limbs resulted in upregulation of Sox9, concomitant with induction of ectopic cartilage. Ectopic expression of the BMP antagonist Noggin in the limb resulted in loss of Sox9 expression from the developing digits, indicating that Sox9 expression during chondrogenesis is BMP dependent. Misexpression of Sox9 in vivo resulted in ectopic cartilage formation in limbs and in vitro was able to change the aggregation properties of limb mesenchymal cells, suggesting that Sox9 functions at the level of mesenchymal cell condensation. Misexpression of Sox9 in dermomyotomal cells, which normally give rise to the axial musculature and dermis, can result in the diversion of these cells from their normal fates towards the cartilage differentiation programme. These cells not only express type II collagen, but also Pax1, a marker of ventral fate in the developing somite. This suggests that the cell fate decision to follow the cartilage differentiation pathway is regulated at an early stage by Sox9. Dev Dyn 1999;215:69–78. © 1999 Wiley‐Liss, Inc.