After the onset of gastrulation, the Drosophila germband undergoes a morphological change in which its length along the anterior-posterior axis increases over two-and-a-half fold while its width along the dorsal-ventral axis simultaneously narrows. The behavior of individual cells during germband extension was investigated by epi-illumination and time-lapse video microscopy of living embryos. Cells intercalate between their dorsal and ventral neighbors during extension, increasing the number of cells along the anterior-posterior axis while decreasing the number of cells along the dorsal-ventral axis. Mutations that reduce segmental subdivision of the embryo along the anterior-posterior axis decrease both germband extension and its associated cell intercalation. In contrast, cell intercalation and germband extension are still detected in embryos that lack dorsal-ventral polarity. Characterization of germband extension and cell intercalation in mutant embryos with altered segmentation gene expression indicates that these processes are regionally autonomous and are dependent upon the establishment of striped expression patterns for certain pair-rule genes. Based on these observations, we propose a model for germband extension in which cell intercalation results from the establishment of adhesive differences between stripes of cells by pair-rule genes.