The perichondrium of adult rats was dissected from the posterior side of the ear where a plane of separation can be easily found between the superficial chondrocytes and the rest of the cartilage. When pulled off, the perichondrium brings with it a cartilaginous strip adhered to its inner layer, with the detachment surface showing projections of broken capsular matrix (PBCM). The perichondrium and subperichondrial cartilage were then transferred as autogeneic grafts to preformed muscle pockets of the abdominal wall and to everted vein chambers placed free in the iliac blood flow. During a period of one to 12 days, chondrogenesis was studied in the grafts and in the graft bed areas next to subperichondrial cartilage. When the perichondrium was placed into a muscular pouch, wherein perichondrocytes survived and a prominent vascular ingrowth in the graft bed was observed, the presence of two types of newly formed cartilage was demonstrated (Types I and II). These types showed differences in their location, time of appearance, and microscopic characteristics. Type I neocartilage appeared in the inner layer of the perichondrium on the third or fourth day after grafting; at this time the cells, surrounded by a well-defined capsular matrix, were large, darkly stained, and highly electron dense. Type II neocartilage, separated from Type I by the PBCM, appeared in the graft bed area located within perichondrial folds on the sixth or seventh day after implantation. Their cells showed a poorly defined capsular matrix and were smaller, lighter stained, and less electron dense than those of Type I. When the perichondrium was transplanted to everted vein chambers placed in the iliac blood flow, wherein perichondrocytes survived and vascular ingrowth from the graft bed was not present, Type I neocartilage was formed but Type II was not. The morphologic and histoautoradiographic findings in these studies suggest that Type I cells come from perichondrocytes of the inner perichondrial layer, whereas Type II cells originate from the undifferentiated perivascular mesenchymal cells of the graft bed.