The inner ear forms by a series of folds within an ectodermal placode. Previous work has shown that changes in surrounding tissues play a more prominent role in invagination than changes in the cytoskeleton of the primordium. Interference with the integrity of the extracellular matrix causes abnormalities in the folding process, primarily related to abnormalities in the paraxial mesoderm which lies ventral to the placode. In this study, the role of the neural cell adhesion molecule (N-CAM) was investigated, based on the expression of this component of the plasmalemma at the time the otic placode begins to fold. Microinjection of blocking antibodies to N-CAM into the paraxial mesoderm adjacent to the otic placode resulted in two major classes of defects, detachment of the primordium from the neural tube and interference with formation of the folds. Microinjection of saline, control immunoglobulin, or antibody against cytoplasmic domain had no effect. These defects correlate with the pattern of N-CAM expression at the time of injection, along the neural ectoderm and otic epithelium and the mesenchyme cells ventral to the primordium. It seems likely that N-CAM is playing a role in heterophilic associations rather than through the homophilic binding domain during formation of the otic vesicle.