The extracellular matrix protein, tenascin, appears in a restricted pattern during organ morphogenesis. Tenascin accumulates along developing peripheral nerves as they leave the spinal cord and enter the limb mesenchyme (Wehrle and Chiquet, Development 110, 401-415, 1990). Here we found that most but not all tenascin deposited along growing nerves is of glial origin. By in situ hybridization with a tenascin cDNA probe, we determined the site of tenascin mRNA accumulation both in normal and nerve-free limbs. In normal wing buds, tenascin mRNA was first detected within the developing limb nerves. Vinculin-positive glial precursor cells, which comigrate with the axons, are the likely source of this tenascin message. In nerveless wing grafts, tenascin was first expressed in tendon primordia in the absence, and thus independently, from innervation. In contrast to normal limbs, grafted wing buds neither contained vinculin-positive glial precursor cells, nor expressed tenascin in regions proximal to tendon primordia. In normal wing buds, tenascin deposited by tendon primordia transiently parallels and surrounds certain developing nerves. After the major nerve pattern is established, tenascin mRNA disappears from nerves in the upper limb, but is expressed in perichondrium and tendons. We propose that glial tenascin facilitates the penetration of axons into the limb bud and is important for nerve fasciculation. In some places, early tendon primordia might help to guide the migration of axons and glial precursor cells towards their target.