Perlecan (Pln) is an abundant heparan sulfate (HS) proteoglycan in the pericellular matrix of developing cartilage, and its absence dramatically disrupts endochondral bone formation. This study examined two previously unexamined aspects of the function of Pln in mesenchymal chondrogenesis in vitro. Using the well-established high-density micromass model of chondrogenic differentiation, we first examined the requirement for endogenous Pln synthesis and secretion through the use of Pln-targeted ribozymes in murine C3H10T1/2 embryonic fibroblasts. Second, we examined the ability of the unique N-terminal, HS-bearing Pln domain I (PlnDI) to synergize with exogenous bone morphogenetic protein-2 (BMP-2) to support later stage chondrogenic maturation of cellular condensations. The results provide clear evidence that the function of Pln in late stage chondrogenesis requires Pln biosynthesis and secretion, because 60%-70% reductions in Pln greatly diminish chondrogenic marker expression in micromass culture. Additionally, these data support the idea that while early chondrocyte differentiation can be supported by exogenous HS-decorated PlnDI, efficient late stage PlnDI-supported chondrogenesis requires both BMP-2 and Pln biosynthesis.