The tissue distribution of the extracellular matrix glycoprotein, tenascin, during cartilage and bone development in rodents has been investigated by immunohistochemistry. Tenascin was present in condensing mesenchyme of cartilage anlagen, but not in the surrounding mesenchyme. In fully differentiated cartilages, tenascin was only present in the perichondrium. In bones that form by endochondral ossification, tenascin reappeared around the osteogenic cells invading the cartilage model. Tenascin was also present in the condensing mesenchyme of developing bones that form by intramembranous ossification and later was present around the spicules of forming bone. Tenascin was absent from mature bone matrix but persisted on periosteal and endosteal surfaces. Immunofluorescent staining of wing bud cultures from chick embryos showed large amounts of tenascin in the forming cartilage nodules. Cultures grown on a substrate of tenascin produced more cartilage nodules than cultures grown on tissue culture plastic. Tenascin in the culture medium inhibited the attachment of wing bud cells to fibronectin-coated substrates. We propose that tenascin plays an important role in chondrogenesis by modulating fibronectin-cell interactions and causing cell rounding and condensation.