Tenascin, an extracellular matrix protein, is expressed in the mesenchyme around growing epithelia in the embryo. We therefore investigated whether epithelial cells can stimulate expression of tenascin in embryonic mesenchyme. Mesenchyme from the presumptive small intestine was used because it is known that reciprocal epithelial-mesenchymal interactions are important for gut morphogenesis. Rat monoclonal antibodies against mouse tenascin were raised and were found to react specifically with mouse tenascin in ELISA. In supernatants of cultured fibroblasts, the antibodies precipitated two peptides of Mr 260 and 210 kD. One of the antibodies also reacted with these tenascin chains in immunoblots of tissue extracts. We found that tenascin was absent during early stages of gut development, at stages when the mesenchyme is already in contact with the stratified epithelium of the endoderm. Rather, it appeared in the mesenchyme when the homogenous endodermal epithelium differentiated into the heterogenous absorptive epithelium. Tenascin remained present in the stroma of the adult gut, close to the migration pathways of the continuously renewing epithelium. When first detected during intestinal differentiation, the 210-kD component was predominant but at birth the relative amount of the 260-kD component had increased. The expression data suggested that the appearance of tenascin in the mesenchyme was dependent on the presence of epithelium. To test this, isolated gut mesenchymes from 13-d-old mouse embryos were cultured for 24 h either alone or together with epithelial and nonepithelial cells. Whereas mesenchyme cultured alone or in the presence of nonepithelial B16-F1 melanoma cells produced only trace amounts of tenascin, expression was strongly stimulated by the epithelial cell line, Madin-Darby canine kidney (MDCK). We propose that growing and differentiating epithelia produce locally active factors which stimulate synthesis of tenascin in the surrounding mesenchyme.