Early skeletal muscle development is accompanied by changes in the composition of the cytoskeleton. In this report we analyze the distribution of the intermediate filament nestin in the developing mouse limb buds in vivo and in mesenchymal cells isolated from limb buds in vitro. The subcellular distribution of nestin mRNA and protein in muscle cells was also analyzed. We find a shift in nestin expression during early limb bud development. At embryonic day 11 (E11), low levels of nestin (protein) were expressed in the mesenchymal cells of the developing limb bud. Later, nestin mRNA and protein were down-regulated in the mesenchymal condensations undergoing chondrogenesis (E12 and E13), but remained expressed predominantly in the ectodermal cells and in the differentiating myoblasts. At E18, only muscle fibres, endothelial cells and nerves were nestin positive. This shift in expression was reproduced in vitro, in micro-mass cultures of mesenchymal cells. In E11 cultures, nestin protein was initially expressed in all cells. Upon formation of cartilage foci (after 2–3 days in culture), nestin immunoreactivity was not observed in cartilage, and low levels were detected in the cells located between the foci. A subpopulation of mono- and multinucleated cells, peripheral to the cartilage nodules, expressed the muscle-specific intermediate filament desmin protein together with high levels of nestin protein. The proportion of nestin-expressing cells could be changed by addition of specific signalling molecules. Insulin-like growth factors I and II (IGF I and II) increased the number of nestin-positive cells, while basic fibroblast growth factor (FGF) reduced the number of nestin-expressing cells. Finally, we present evidence for a different subcellular localization of nestin protein and mRNA: the mRNA is predominantly located in the ends of the muscle cell, whereas the protein is found in the central region. Intracellular localization of nestin mRNA may constitute an additional level of regulation of the cytoskeleton during muscle development.