Osteogenin is a protein isolated from demineralized bovine bone matrix. When implanted in rats, osteogenin induces the differentiation of cartilage and formation of endochondral bone. When added to stage 24 and 25 chick limb bud mesoderm cells in culture, it stimulated synthesis of sulfated proteoglycans by over 10-fold without stimulating cell division. The increase was detected after only 2 days in culture. Morphologically, in the presence of osteogenin, all cells in the culture appeared to form cartilage, rather than the nodules of cartilage surrounded by noncartilage areas in control cultures. The distribution of type II collagen correlated with the morphological differentiation of cartilage. When nonchondrocyte and chondrocyte cell populations were separated, osteogenin stimulated sulfated proteoglycan synthesis in all populations of cells. However, the greatest stimulation (24-fold) was seen in the originally nonchondrocyte population, which apparently still had some potential to form cartilage. In this study, chick limb bud mesoderm cells in vitro responded to osteogenin, a protein derived from adult bovine bone matrix. The cells that were responsive included those that initially did not form cartilage. Osteogenin belongs to a superfamily of proteins, many of which are important in development. It is possible that osteogenin has a role in embryonic cartilage development.