Developing cartilaginous and ossified skeletal anlagen is encapsulated within a membranous sheath of flattened, elongated cells called, respectively, the perichondrium and the periosteum. These periskeletal tissues are organized in distinct morphological layers that have been proposed to support distinct functions. Classical experiments, particularly those using an in vitro organ culture system, demonstrated that these tissues play important roles in regulating the differentiation of the subjacent skeletal elements. However, there has been a lack of molecular markers that would allow analysis of these interactions. To understand the molecular bases for the roles played by the periskeletal tissues, we generated microarrays from perichondrium and periosteum cDNA libraries and used them to compare the gene expression profiles of these two tissues. In situ hybridization analysis of genes identified on the microarrays revealed many unique markers for these tissues and demonstrated that the histologically distinct layers of the perichondrium and periosteum are associated with distinct molecular expression domains. Moreover our marker analysis identified new domains that had not been previously recognized as distinct within these tissues as well as a previously uncharacterized molecular domain along the lateral edges of the adjacent developing cartilage that experimental analysis showed to be dependent upon the perichondrium.