This investigation was designed to characterize the effect of the extracellular matrix molecule versican on chondrocyte morphology, using the well-studied chondrocyte cell culture system. When cultured chondrocytes reverted or "dedifferentiated" to a fibroblast-like morphology, we found that versican expression was significantly enhanced. Transfection of chondrocytes, isolated from embryonic chicken sterna, with a chicken miniversican construct accelerated the reversion process, while expression of an antisense construct inhibited it. A mutant miniversican lacking two epidermal growth factor-like motifs (versicanDeltaEGF) promoted differentiation, as shown by morphological changes and changes in the expression of other extracellular matrix molecules. A truncated versican mutant, the G3DeltaEGF, a G3 domain lacking its two epidermal growth factor-like motifs, also enhanced differentiation. This effect is related to G3DeltaEGF-induced change in cytoskeleton, since transfected cells exhibited misassembly of actin filaments. This article thus provides the first evidence that versican modulates chondrocyte morphology via changes in cytoskeletal structure, and may imply that extracellular matrix molecules play an important role in cell differentiation.