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Differentiation of cartilage cells from embryonic precursor cells is characterized by the onset of biosynthesis of at least two cartilage-specific gene products, type II collagen and cartilage-specific chondroitin sulfate proteoglycan (CSPG). Biochemical and immunological assays for these compounds now allow rapid, quantitative, and specific determination of the onset of cartilage differentiation, and present several advantages over assays that use histochemical stains or [35S]-sulfate incorporation into glycosaminoglycans. Chondrogenic differentiation also is associated with the formation of extracellular, high MW proteoglycan (CSPG) aggregates containing hyaluronic acid and the loss of fibronectin, or LETS protein, a cell surface glycoprotein found on presumptive chondroblasts, fibroblasts, and several other cell types. Comparatively little insight has been gained recently regarding the mechanism of cartilage cell differentiation. A number of factors or "inducers" of cartilage differentiation, such as chondroitin sulfate proteoglycan, notochord, spinal cord, low oxygen tension, and collagen substrates, increase the amount of glycosaminoglycan synthesis per cell, but the question remains open as to whether these factors also selectively increase the number of cells differentiating from precursor cells into chondroblasts, or whether they only increase cell viability. Other factors, such as conditioned medium from chondrocyte cultures, increase significantly the number of chondrocyte colonies arising in mass cultures of limb bud mesenchyme, but differentiation of nonchondrogenic cells is stimulated as well. Similarly, many inhibitors of cartilage differentiation, such as BrdUrd and 6-amino nicotinamide, also inhibit myogenic differentiation. It is possible that a unique and specific inducer or regulating factor of cartilage cell differentiation may not exist, for cartilage differentiation of normal embryonic mesenchyme can be triggered by a variety of environmental conditions, such as cell density, pH, potassium ion concentration, and fetal calf serum. These results imply that the temporal and spatial controls of cartilage differentiation are governed by environmental influences that are each of rather low specificity, but which together synergistically generate a morphogenetic control of high specificity. Signals which appear able to mimic those controlling normal cartilage differentiation seem to be exchanged during formation of ectopic cartilage. Muscle tissue and periosteum can be triggered to form cartilage by demineralized bone matrix. Chick limb bud epithelium induces type II collagen synthesis in embryonic mouse tooth germ, whereas homologous, oral epithelium induces the formation of dentin (type I collagen). Thus, the type of response elicited from mesenchyme cells can be determined by nearby epithelia, and that response frequently can be the formation of cartilage.