Reciprocal epithelio-mesenchymal interactions between the prospective epidermis and the underlying dermis are the major driving forces in the development of skin appendages. Feather development is initiated by a still unknown signal from the dermis in feather-forming skin. The morphological response of the ectoderm to this signal is the formation of an epidermal placode, which signals back to the mesenchyme to induce dermal condensations. Together, epidermal and dermal components constitute the outgrowing feather bud. The bHLH transcription factor cDermo-1 is expressed in developing dermis and is the earliest known marker of prospective feather tracts. To test its function during feather development, we forced cDermo-1 expression in embryonic chicken dermis using a retroviral expression vector. In featherless (apteric) regions, cDermo-1 misexpression induced dense, thickened dermis normally observed in feathered skin (pterylae), and leads to the development of regularly spaced and normally shaped ectopic feather buds. In pterylae, cDermo-1 misexpression enhanced feather growth. In hindlimb skin, according to the local skin identity, misexpression of cDermo-1 induced ectopic scale formation. Thus, we show that forced cDermo-1 expression in developing dermis is sufficient to launch the developmental program leading to skin appendage formation. We propose a role of cDermo-1 at the initial stages of feather induction upstream of FGF10.