The extracellular matrix protein, tenascin, appears in a restricted pattern during organ morphogenesis. Here we studied the expression of tenascin along developing peripheral nerves in chick embryos and tested its activity as a substrate for cultured neurons. Motor axons grow out through the tenascin-rich, anterior part of the sclerotome. Shortly after, tenascin surrounds axon fascicles of ventral roots. At the limb levels, outgrowing axons accumulate in the tenascin-containing girdle region forming a plexus. In the limb, tenascin first appears in bracket-like structures that surround the precartilage cell condensations of the femur and humerus, respectively. These regions coincide with the channels along which axons first grow in from the girdle plexus to form the limb nerves. Later, the major tenascin staining is associated with the cartilage and tendon primordia, and not with the limb nerves. We used tenascin as a substrate for cultured neural explants and single cells in order to test for its function in neurite outgrowth. Dissociated embryonic neurons of various types attached to mixed polylysine/tenascin substrates and sprouted rapidly after a lag of several hours. Outgrowth was inhibited and neurites were detached by anti-tenascin antibodies. On substrates coated with tenascin alone, neurite outgrowth was achieved from 3 day spinal cord explants. Whereas growth cones were well spread and rapidly moving, the neurites were poorly attached, straight and rarely branched. We speculate that in vivo tenascin allows axonal outgrowth, but inhibits branching and supports fasciculation of newly formed axons.