Type II collagen is a major component of cartilage providing structural integrity to the tissue. Type II procollagen can be expressed in two forms by differential splicing of the primary gene transcript. The two mRNAs either include (type IIA) or exclude (type IIB) an exon (exon 2) encoding the major portion of the amino (NH2)-propeptide (Ryan, M. C., and L. J. Sandell. 1990. J. Biol. Chem. 265:10334-10339). The expression of the two procollagens was examined in order to establish a potential functional significance for the two type II procollagen mRNAs. First, to establish whether the two mRNAs are functional, we showed that both mRNAs can be translated and the proteins secreted into the extracellular environment. Both proteins were identified as type II procollagens. Secondly, to test the hypothesis that differential expression of type II procollagens may be a marker for a distinct population of cells, specific procollagen mRNAs were localized in tissue by in situ hybridization to oligonucleotides spanning the exon junctions. Embryonic vertebral column was chosen as a source of tissue undergoing rapid chondrogenesis, allowing the examination of a variety of cell types related to cartilage. In this issue, each procollagen mRNA had a distinct tissue distribution during chondrogenesis with type IIB expressed in chondrocytes and type IIA expressed in cells surrounding cartilage in prechondrocytes. The morphology of the cells expressing the two collagen types was distinct: the cells expressing type IIA are narrow, elongated, and ''fibroblastic'' in appearance while the cells expressing type IIB are large and round. The expression of type IIB appears to be correlated with abundant synthesis and accumulation of cartilagenous extracellular matrix. The expression of type IIB is spatially correlated with the high level expression of the cartilage proteoglycan, aggrecan, establishing type IIB procollagen and aggrecan as markers for the chondrocyte phenotype. Transcripts of type II collagen, primarily type IIA, are also expressed in embryonic spinal ganglion. While small amounts of type II collagen have been previously detected in non-cartilagenous tissues, the detection of this new form of the collagen in relatively high abundance in embryonic nerve tissue is unique. Taken together, these findings imply a potential functional difference between type IIA and type IIB procollagens and indicate that the removal of exon 2 from the pre-mRNA, and consequently the NH2-propeptide from the collagen molecule, may be an important step in chondrogenesis. In addition, type II procollagen, specifically type IIA, may function in noncartilage tissues, particularly during development.