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To develop a more useful organ culture model for periosteal chondrogenesis in vitro, we compared the effects of the embedding of explants in agarose versus collagen gels. Chondrogenic differentiation was examined by means of histological observation and in terms of the expression of mRNA encoding two cartilage markers, Type II collagen and Aggrecan. Periosteal explants were derived from the tibiae of rabbits. These explants were embedded in either agarose gel or collagen gel and cultured for 6 weeks. Histological examinations revealed that in the agarose gel, cells were neither present in the explants nor in the gel. In the collagen gel, cells migrated from the explanted tissues into the gel, and some cells were round. However, no explants showed safranin-O staining. Only 10% of 10 surviving explants in the agarose gel expressed the Type II collagen gene and the Aggrecan gene. On the other hand, of 25 surviving explants in the collagen gel, the expression of the Type II collagen gene was detected in 18 explants (72%) and that of the Aggrecan gene was detected in 21 explants (84%). In conclusion, we demonstrated that the periosteum exerts chondrogenesis in certain circumstances and its chondrogenesis is closely related to the culture material.