Dissected embryonic chick limbs release neutral metalloproteinases during endochondral bone development. These enzymes degrade cartilage proteoglycan and gelatin in culture medium. We found the enzymes active in the medium conditioned by explants of the region adjacent to the bone marrow cavity (cavity-surround). These enzymes degrade proteoglycan (PG) and/or gelatin. These spontaneously active enzymes are resistant to serum and tissue proteinase inhibitors, alpha 2-macroglobulin, and cartilage metalloproteinase inhibitor (TIMP). The other enzymes secreted from tarsus and bone marrow explants are mostly latent in the culture medium. Activated tarsus enzymes (PG degrading and gelatinolytic) are blocked by the above inhibitors. Activated marrow enzyme does not degrade PG but is resistant to those inhibitors. Cavity-surround enzymes may play an important role in embryonic osteogenesis of long bones because of their resistance to tissue and serum inhibitors. The in vivo mechanisms by which cavity-surround enzymes are activated are yet to be determined.