Endochondral ossification in fracture healing of rats at 4, 8, 11, 14, and 21 days was analyzed using immunological and molecular probes for markers of the chondrocyte and osteoblast phenotype. These markers were osteocalcin, type I and type II collagen, including the probes homologous to the alternatively spliced forms of alpha 1 type II collagen, type IIA and type IIB. Histologic examination was performed on serial sections of the same tissue blocks to correlate cellular morphology with the immunohistochemical and in situ hybridization findings. At the junction of the cartilaginous and osseous tissue, an overlap of phenotype and morphology was noted. At the 8-day time point, the cells with chondrocyte morphology expressed intracellular message for osteocalcin and type I collagen. Immunohistochemical analysis of these cells also demonstrated intracellular osteocalcin. However, high levels of the type IIA collagen mRNA, which has previously been associated with less differentiated mesenchymal precursor cells, were expressed in both chondrocytes and osteoblasts. At the later time point (21 days) there was a substantial decrease in the number of cells displaying shared phenotypic characteristics. In situ hybridization and immunohistochemistry have permitted identification of an overlapping or shared phenotype in osteoblasts and chondroblasts in fracture callus. The findings raise important questions regarding the possible plasticity of mesenchymal cell phenotypes within the dynamic environment of fracture healing. Additional examination of these issues will further define factors involved in origin, differentiation, and maturation of bone and cartilage cells.