Chondrogenesis during embryonic skeletal development involves the condensation of mesenchymal cells followed by their differentiation into chondrocytes. We describe herein a previously unrecognized regulator of mammalian chondrogenesis encoded by a murine growth factor-inducible immediate-early gene, cyr61. The Cyr61 protein is a secreted, heparin-binding protein (379 amino acids with 38 conserved cysteines) that promotes cell adhesion, migration, and proliferation. The expression pattern of the cyr61 gene during embryogenesis is tissue specific and temporally regulated. Most notably, cyr61 is transiently expressed in mesenchymal cells of both mesodermal and neuroectodermal origins undergoing chondrogenesis, suggesting that Cyr61 may play a role in the development of the embryonic skeleton. In this communication, we demonstrate that the Cyr61 protein promotes chondrogenesis in micromass cultures of limb bud mesenchymal cells in vitro and is likely to play a similar role in vivo based on the following observations: (1) Cyr61 is present in the embryonic limb mesenchyme during chondrogenesis in vivo and in vitro; (2) purified recombinant Cyr61 protein added exogenously to micromass cultures promotes chondrogenesis as judged by precocious expression of type II collagen, increased [35S]sulfate incorporation, and larger Alcian blue-staining cartilage nodules; (3) Cyr61 enhances cell-cell aggregation, an initial step in chondrogenesis, and promotes chondrogenic differentiation in cultures plated at subthreshold cell densities that are otherwise unable to support differentiation; and (4) neutralization of the endogenous Cyr61 with specific antibodies inhibits chondrogenesis. Taken together, these results identify Cyr61 as a novel player in chondrogenesis that contributes to the development of the mammalian embryonic skeleton.