We have analyzed the roles of cell contact during determination of the outermost enveloping layer (EVL) and deeper neurectoderm in zebrafish embryos. Outer cells, but not deeper cells, are specified to express the EVL-specific marker, cyt1 by late blastula. EVL specification requires cell contact or close cell proximity, because cyt1 is not expressed after explant dissociation. The EVL may be homologous to the Xenopus epithelial layer, including the ventral larval epidermis. While Xenopus epidermal cytokeratin gene expression is activated by bone morphogenetic protein (BMP) signaling, zebrafish cyt1 is not responsive to BMPs. Zebrafish early gastrula ectodermal explants are specified to express the neural markers opl (zic1) and otx2, and this expression is prevented by BMP4. Dissociation of zebrafish explants prevents otx2 and opl expression, suggesting that neural specification in zebrafish requires cell contact or close cell proximity. This finding is in contrast to the case in Xenopus, where ectodermal dissociation leads to activation of neural gene expression, or autoneuralization. Our data suggest that distinct mechanisms direct development of homologous lineages in different vertebrates. Developmental Dynamics 232:85–97, 2005. © 2004 Wiley-Liss, Inc.