Osteoblasts and osteocytes derive from the same precursors, and osteocytes are terminally differentiated osteoblasts. These two cell types are distinguishable by their morphology, localization and levels of expression of various bone cell-specific markers. In the present study on the chicken femur we investigated the properties of the mesenchymal cells within cartilage canals on their course into the secondary ossification centre (SOC). We examined several developmental stages after hatching by means of light microscopy, electron microscopy, immunohistochemistry and in situ hybridization. Cartilage canals appeared as extensions of the perichondrium into the developing distal epiphysis and they were arranged in a complex network. Within the epiphysis an SOC was formed and cartilage canals penetrated into it. In addition, they were successively incorporated into the SOC during its growth in the radial direction. Thus, the canals provided this centre with mesenchymal cells and vessels. It should be emphasized that regression of cartilage canals could never be observed in the growing bone. Outside the SOC the mesenchymal cells of the canals expressed type I collagen and periostin and thus these cells had the characteristics of preosteoblasts. Periostin was also expressed by numerous chondrocytes. Within the SOC the synthesis of periostin was down-regulated and the majority of osteoblasts were periostin negative. Furthermore, osteocytes did not secret this protein. Tissue-non-specific alkaline phosphatase (TNAP) staining was only detectable where matrix vesicles were present. These vesicles were found around the blind end of cartilage canals within the SOC where newly formed osteoid started to mineralize. The vesicles originated from osteoblasts as well as from late osteoblasts/preosteocytes and thus TNAP was only expressed by these cells. Our results provide evidence that the mesenchymal cells of cartilage canals express various bone cell-specific markers depending on their position. We suggest that these cells differentiate from preosteoblasts into osteocytes on their course into the SOC and consider that cartilage canals are essential for normal bone development within the epiphysis. Furthermore, we propose that the expression of periostin by preosteoblasts and several chondrocytes is required for adhesion of these cells to the extracellular matrix.