The cell surface proteoglycan, syndecan, and the extracellular matrix glycoprotein, tenascin, are expressed in the mesenchyme during early development of many organs. We have studied the expression patterns of syndecan and tenascin during initiation of tooth development and in association with mesenchymal cell condensation and compared these with cell proliferation. Syndecan, tenascin and bromodeoxyuridine (BrdU) incorporation were localized by triple-labelling immunohistochemistry in serial sections of molar tooth germs of mouse embryos. Prior to formation of the epithelial tooth bud, syndecan accumulated in the mesenchymal cells which underlie the presumptive dental epithelium, but tenascin was not detected at this stage. Tenascin appeared during initiation of the epithelial down-growth at the lingual aspect of the tooth germ. During subsequent formation of the epithelial bud, at the late bud stage, syndecan and tenascin became exactly colocalized in the condensed mesenchyme which was clearly demarcated from other jaw mesenchyme. The expression of syndecan and tenascin was accompanied by rapid cell proliferation as indicated by marked BrdU incorporation. When development advanced to the cap stage, syndecan staining intensity in the dental papilla mesenchyme increased further whereas tenascin became reduced. In conclusion, the results demonstrate that the expression patterns of syndecan and tenascin overlap transiently during the period of mesenchymal cell condensation and that this is accompanied by cell proliferation. Syndecan and tenascin may play a role in growth control and in compartmentalization of the dental mesenchymal cells in the condensate.