The spatial and temporal distribution of transcripts for the TRE/CRE-binding basic region-leucine zipper protein hXBP-1 was determined by in situ hybridization. Analysis of embryos from day 10.5 to 18.5 pc revealed high level expression of hXBP-1 RNA in two developing organ systems: 1) in bone and cartilage cells of the developing skeleton and toothbuds, and 2) in exocrine glands including the pancreas and the submandibular and salivary glands. High level expression was also found in whisker follicles and in selected cells in brown adipose tissue. In the developing skeleton, hXBP-1 RNA was expressed starting on day 11.5 pc in osteoblasts of newly formed intramembranous bone. Thereafter, hXBP-1 was expressed in both osteoblasts and preosteoblasts in bone formed directly by intramembranous formation as well as in bone formed during endochondral ossification. The most intense signal was observed in preosteoblasts and osteoblasts of newly forming bone. At day 11.5 pc low level hXBP-1 expression was also observed in matrix secreting chondroblasts of bones which are formed initially of cartilage, at the stage where they consist entirely of cartilage. Signal was also present in matrix producing chondroblasts of the mature zone of the growth region during endochondral ossification although at significantly lower level than in osteoblasts. hXBP-1 is thus the first transcription factor described, to our knowledge, whose level of expression is modulated during the osteoblast developmental sequence in vivo. The pattern of expression of hXBP-1 in the developing skeleton was found to be very similar to that of the genes encoding the tissue inhibitor of metalloproteinase and alkaline phosphatase throughout development. These observations suggest that hXBP-1 may play a role in regulating the expression of tissue specific genes (TIMP, osteonectin, osteopontin, osteocalcin) expressed in osteoblasts. It is intriguing that the promoter regions of several such genes contain potential hXBP-1 binding sites.