Morphogenesis of the kidney is regulated by reciprocal tissue interactions between the epithelial ureter bud and the metanephric mesenchyme. The differentiation of the kidney involves profound changes in the extracellular matrix, and therefore matrix receptors may have an important role in this process. We studied the expression of syndecan, a cell surface proteoglycan acting as a receptor for interstitial matrix materials, by using a monoclonal antibody against the core protein of the molecule. Syndecan was not detected in the uninduced metanephric mesenchyme. During the formation of the ureter bud from the Wolffian duct, syndecan appeared in the mesenchymal cells around the invaginating bud. Simultaneously with the first branching of the ureter bud, the whole nephric mesenchyme became syndecan positive, but a 3- to 10-cell-thick layer around the branching ureter bud, representing the presumptive tubular cells, was most intensely stained. During the assembly of the mesenchyme cells into pretubular aggregates, syndecan was detected in these aggregates and, to a lesser degree, in the morphologically undifferentiated mesenchyme. Thereafter syndecan was found only in the differentiating epithelium, from which it was gradually lost during maturation of the nephron. It was last detected in the periphery of the kidney, where tubulogenesis still continued. In transfilter cultures we showed that syndecan appeared in the nephric mesenchyme during the period when the mesenchyme becomes programmed to transform into epithelial structures. By using interspecies recombinations and a species-specific antibody we excluded the possibility that syndecan in the mesenchyme would originate from the inductor. We conclude that syndecan expression is regulated by epithelial-mesenchymal interactions. The findings that syndecan appeared as an early response to induction and that its distribution showed both spatial and temporal correlation with kidney morphogenesis suggest an important role for this molecule in development.