We find that during embryogenesis the expression of HMGN1, a nuclear protein that binds to nucleosomes and reduces the compaction of the chromatin fiber, is progressively down-regulated throughout the entire embryo, except in committed but continuously renewing cell types, such as the basal layer of the epithelium. In the developing limb bud, the expression of HMGN1 is complementary to Sox9, a master regulator of the chondrocyte lineage. In limb bud micromass cultures, which faithfully mimic in vivo chondrogenic differentiation, loss of HMGN1 accelerates differentiation. Expression of wild-type HMGN1, but not of a mutant HMGN1 that does not bind to chromatin, in Hmgn1-/- micromass cultures inhibits Sox9 expression and retards differentiation. Cliromatin immunoprecipitation analysis reveals that HMGN1 binds to Sox9 chromatin in cells that are poised to express Sox9. Loss of HMGN1 elevates the amount of HMGN2 bound to Sox9, suggesting functional redundancy among these proteins. These findings suggest a role for HMGN1 in chromatin remodeling during embryogenesis and in the activation of Sox9 during chondrogenesis.