Several putative guidance molecules are restricted to the marginal and subplate zones, the major fibre tracts in the developing cortex. It is presently unknown how their distribution is achieved and how these molecules affect neurite extension. Tenascin-C is of particular interest in this context, because it may either promote or deflect growing axons depending on its mode of presentation. Therefore, the cellular origin of tenascin-C in the developing rat cortex and its effects on the extension of cortical afferents and efferents were examined. Tenascin-C protein is first restricted to the marginal and subplate zones and spreads later into the developing grey matter, in close correlation with afferent innervation. In situ hybridization showed that tenascin-C mRNA is first confined to the ventricular zone, at some distance from the location of the protein, while at later stages tenascin-C-synthesizing cells become scattered throughout the cortical thickness, concomitant with the spread of the protein. In order to assess its function, monoclonal antibodies directed against different domains of tenascin-C were used in quantitative axonal outgrowth assay. These perturbation experiments suggested that distinct tenascin-C fibronectin type 111 repeats sustain the growth of thalamic and cortical axons on cortical membrane carpets, whereas the EGF-type repeats are not involved. The combination of different antibodies revealed that separate fibronectin-type III repeats exert cooperative effects. These results suggest that ventricular zone cells regulate the establishment of thalamic and cortical axonal projections through locally restricted deposition of tenascin-C.