Syndecan is an integral membrane proteoglycan that behaves as a matrix receptor by binding cells to interstitial matrix and associating intracellularly with the actin cytoskeleton. Using immunohistology, we have now localized this proteoglycan during the morphogenesis of various derivatives of the surface ectoderm in mouse embryos. Syndecan is expressed on ectodermal epithelia, but is selectively lost from the cells that differentiate into the localized placodes that initiate lens, nasal, otic and vibrissal development. The loss is transient on presumptive ear, nasal and vibrissal epithelia; the derivatives of the differentiating ectodermal cells that have lost syndecan subsequently re-express syndecan. In contrast, syndecan is initially absent from the mesenchyme underlying the surface ectoderm, and is transiently expressed when the surface ectoderm loses syndecan. These results demonstrate that expression of syndecan is developmentally regulated in a distinct spatiotemporal pattern. On epithelia, syndecan is lost at a time and, location that correlates with epithelial cell differentiation and, on mesenchyme, syndecan is acquired when the cells aggregate in proximity to the epithelium. This pattern of change with morphogenetic events is unique and not duplicated by other matrix molecules or adhesion receptors.