The induction and specification of a large number of vertebrate organs require reciprocal signaling between an epithelium and subjacent mesenchyme. In the formation of integumentary organs, the initial inductive signaling events leading to the formation of the organ primordia stem from the mesenchyme. However, the epithelium must have the capacity to respond to these signals. We demonstrate that bone morphogenetic protein 7 (Bmp7) is an early molecular marker for epidermal organ development during development of feathers and scales of the chick. Bmp7 is expressed broadly in the preplacode epidermis and subsequently becomes localized to the forming placodes of feathers and scales. An examination of Bmp7 expression in the scaleless mutant chicken integument indicates that Bmp7 expression in the epidermis is associated with the ability to form epidermal organs. We show that BMP7 function is necessary for the formation of epidermal placodes in both feather and scale forming epidermis. In addition, precocious expression of Bmp7 in the metatarsal epidermis of the Silkie mutant or treatment of the metatarsus with ectopic BMP7 protein results in feather development from scale forming integument. From these data, we propose that Bmp7 is necessary and sufficient, in a developmental context, to mediate the competence of an epithelium to respond to inductive signals from the underlying mesenchyme to form epidermal organs in the chick. We propose that regulation of Bmp7 in localized areas of the embryonic epidermis facilitates the development of regional formation of integumentary organs. Developmental Dynamics 231:22–32, 2004. © 2004 Wiley-Liss, Inc.