Cells that migrate cephalad from the primitive node, form a midline condensation within the hypoblast layer. Eventually these cells condense into a rod like structure that separates from the underlying endoderm to become the notochord. The notochord establishes a central axis for the embryonic disc. Among other things, factors produced by the notochord induce the formation of the neural tube which subsequently develops into the brain and spinal cord.
Like many other structures in development, the cranial end of the notochord (E) is further along in development than the caudal end (C). In the rostral end of the embryo, as seen above, the notochord is fully formed and located between the ectoderm and endoderm (E). Soon it will begin to secrete factors that will induce the overlying ectoderm to undergo neurulation. In the caudal end of the embryo, the cells that will form the notochord are still interspersed within the hypoblast (endoderm) (C).