Type II procollagen is expressed as two splice forms. One form, type IIB, is synthesized by chondrocytes and is the major extracellular matrix component of cartilage. The other form, type IIA, contains an additional 69 amino acid cysteine-rich domain in the NH₂-propeptide and is synthesized by chondrogenic mesenchyme and perichondrium. We have hypothesized that the additional protein domain of type IIA procollagen plays a role in chondrogenesis. The present study was designed to determine the localization of the type IIA NH₂-propeptide and its function during chondrogenesis. Immunofluorescence histochemistry using antibodies to three domains of the type IIA procollagen molecule was used to localize the NH₂-propeptide, fibrillar domain, and COOH-propeptides of the type IIA procollagen molecule during chondrogenesis in a developing human long bone (stage XXI). Before chondrogenesis, type IIA procollagen was synthesized by chondroprogenitor cells and deposited in the extracellular matrix. Immunoelectron microscopy revealed type IIA procollagen fibrils labeled with antibodies to NH₂-propeptide at ∼70 nm interval suggesting that the NH₂-propeptide remains attached to the collagen molecule in the extracellular matrix. As differentiation proceeds, the cells switch synthesis from type IIA to IIB procollagen, and the newly synthesized type IIB collagen displaces the type IIA procollagen into the interterritorial matrix. To initiate studies on the function of type IIA procollagen, binding was tested between recombinant NH₂-propeptide and various growth factors known to be involved in chondrogenesis. A solid phase binding assay showed no reaction with bFGF or IGF-1, however, binding was observed with TGF-β1 and BMP-2, both known to induce endochondral bone formation. BMP-2, but not IGF-1, coimmunoprecipitated with type IIA NH₂-propeptide. Recombinant type IIA NH₂-propeptide and type IIA procollagen from media coimmunoprecipitated with BMP-2 while recombinant type IIB NH₂-propeptide and all other forms of type II procollagens and mature collagen did not react with BMP-2. Taken together, these results suggest that the NH₂-propeptide of type IIA procollagen could function in the extracellular matrix distribution of bone morphogenetic proteins in chondrogenic tissue.