Matrix Gla protein (MGP) is, along with osteocalcin, a skeletal member of the family of extracellular mineral-binding Gla proteins. Although the precise function of these proteins remains obscure, circumstantial evidence suggests that they play a role in endochondral ossification. As a first step toward understanding MGP function we have performed a preliminary characterization of its promoter element and studied the developmental pattern of expression of this gene. DNA transfection experiments indicate that the mouse MGP promoter functions better in cells expressing the MGP gene than in cells that do not express the gene. During mouse development, MGP gene expression is detectable as early as day 10.5 of embryonic development (E10.5), before any skeletal structures are identifiable. In situ hybridization analysis shows that MGP mRNA is initially present at the mesenchymal epithelial interphase in lung and limb buds. As development proceeds, MGP gene is predominantly expressed in cells of the chondrocytic lineage in areas that will undergo endochondral ossification as well as in areas that will remain cartilaginous, such as the trachea and bronchi. In growth plate cartilage, MGP mRNA is present in resting, proliferative, and late hypertrophic chondrocytes. Surprisingly, MGP mRNA is absent from the early hypertrophic chondrocytes and from the osteoblasts. Finally, the MGP gene is expressed at a lower level in kidney medulla and uterus smooth muscle but not in brain, spleen, or heart during development. This study demonstrates that during development MGP gene expression occurs early and is predominant at the epithelial mesenchymal interfaces, principally of lung and limb buds, and in cells of the chondrocytic lineage. This finding raises the intriguing possibility that MGP may play distinct roles during embryogenesis and in the adult organism.