Each skeletal element where marrow develops is first defined by a hypertrophic cartilage blueprint. Through programmed tissue substitution, the cartilaginous skeletal model is replaced by trabecular bone and marrow, with accompanying longitudinal tissue growth. During this process of endochondral ossification, hypertrophic cartilage expresses a unique matrix molecule, collagen X. Previously we reported that transgenic mice with dominant interference collagen X mutations develop variable skeleto-hematopoietic abnormalities, manifested as growth plate compressions, diminished trabecular bone, and reduced lymphatic organs (Nature 1993, 365:56). Here, histology and flow cytometry reveal marrow hypoplasia and impaired hematopoiesis in all collagen X transgenic mice. A subset of mice with perinatal lethality manifested the most severe skeletal defects and a reduction of marrow hematopoiesis, highlighted by a lymphocyte decrease. Thymic reduction is accompanied by a paucity of cortical immature T cells, consistent with the marrow's inability to replenish maturing cortical lymphocytes. Diminished spleens exhibit indistinct lymphatic nodules and red pulp depletion; the latter correlates with erythrocyte-filled vascular sinusoids in marrows. All mice display reduced B cells in marrows and spleens, and elevated splenic T cells. These hematopoietic defects underscore an unforeseen link between hypertrophic cartilage, endochondral ossification, and establishment of the marrow microenvironment required for blood cell differentiation.