The complex morphogenetic events and the concomitant structural and functional differentiation of intestinal progenitor cells are dependent on tissue interactions. Several experimental models of hetero-species or -topic recombinants between epithelial and mesenchymal anlagen are described. They enabled us to elucidate the respective roles of these tissue components in morphogenesis, epithelial differentiation, and hormone-elicited responses. Among the mechanisms of tissue interactions, the possible mediation of permissive and instructive information via the extracellular matrix is postulated. Arguments in favor of this are provided by the observation of compositional changes in matrix molecules during intestinal development and differentiation. On the other hand, in vitro experimental data emphasize the role of actual contacts between epithelial and mesenchymal cell populations and the importance of the mesenchyme for basement membrane formation.