WASHINGTON (AP) _ A 17-year-old Chicago youth won a $20,000 college scholarship Monday night for a project on molecular genetics that he believes may advance understanding of the conversion of nitrogen from air into ammonia.

Matthew Peter Headrick won first place in the Westinghouse Science Talent Search, the nation's oldest high school science competition.

His selection was announced at an awards banquet attended by more than 500 leaders from science, government, education and business.

Headrick is a senior at the University of Chicago Laboratory Schools High School and plans to study at Princeton or Stanford universities for a career in physics or biophysics.

The next two top winners were David Ruchien Liu, 16, of Riverside, Calif., who entered a neuroscience project, and David Michael Shull, 17, of Tacoma, Wash., who developed a method of placing the genetic coding for production of a molecule into white blood cells. They each received $15,000 awards.

The prestigious Westinghouse Science Talent Search, an annual competition established in 1942, started last September when 1,431 students entered from 36 states. The list was cut to 300 by a board of eight scientists from a variety of fields.

Forty finalists received a five-day trip to Washington, where they underwent additional judging to determine their scientific creativity and potential.

Of the 1,960 winners in the Search since its inception, five have gone on to win Nobel Prizes; two have won Field Medals for distinguished work in mathematics and eight have been awarded MacArthur Foundation Fellowships for research in the physical and life sciences.

For his winning project, Headrick used molecular genetics techniques to isolate for the first time the gene that is necessary for nitrogen fixation in a fresh water blue-green alga. Nitrogen fixation, the conversion of molecular nitrogen from air into nitrogen-carrying chemical compounds that plants can use, is essential for the synthesis of amino acids and for all life. The alga in question converts the nitrogen to ammonia.

Search officials said that Headrick ''believes his work will help toward a better understanding of the nitrogen fixation systems and the process of cellular differentiation.''

The fourth through 10th place winners and scholarship amounts were:

-Soojin Ryu, 18, Bronx, N.Y., $10,000;

-Joshua Fischman, 17, Bethesda, Md., $10,000;

-Royce Yung-Tze Peng, 17, Rancho Palos Verdes, Calif., $10,000;

-Laura Andrea Ascenzi, 17, Sunnyside, N.Y., $7,500;

-Andrew M. Lines, 17, Arlington, Va., $7,500;

-Mina Kim Yu, 17, of Fairfax, Va., $7,500;

-Bianca Denise Santomasso, 17, New York City, $7,500.

Selected as first and second alternates were Jennifer Lynn Ryder, 17, Fresno, Calif. and Sean Eric McGuire, 18, San Antonio, Texas. The alternates and the 28 other national finalists were awarded $1,000 scholarships making the total value of the awards $140,000.