Hydra, as a member of the phylum Cnidaria, is characterized by a body lining organized as an epithelial bilayer with an intervening extracellular matrix (ECM) termed the mesoglea. Previous studies have established that the mesoglea has components indicative of mammalian ECM such as type IV collagen, laminin, fibronectin, and heparan sulfate proteoglycan, and these components appear to play a critical role in hydra head regeneration. A remarkable feature of hydra is its ability to reorganize into its adult structure within 96 hr to 7 days from pellets formed from dissociated hydra cells. This regenerative model has been termed the hydra cell aggregate system. The present study has been designed to characterize the biogenesis of mesoglea in hydra cell aggregates and to determine its role in morphogenesis of aggregates. We find that hydra cell aggregates first form an epithelial bilayer by 12 hr of development and then subsequently develop a mesoglea. Morphogenesis of hydra structure then follows formation of the mesoglea. Immunofluorescence studies indicate that mesoglea components are first deposited between the epithelial bilayer by about 12-17 hr of pellet formation, and pulse-labeling studies indicate that the translation rate of matrix components peaks by 48-72 hr of development. Ultrastructural studies indicate that a mature mesoglea is formed by 48-96 hr of pellet formation. Drugs such as beta-aminoproprionitrile and 2,2'-dipydridyl, which interfere with the cross-linking of collagens, and p-nitrophenyl-beta-D-xylopyranoside, which interferes with the addition of GAG moieties to proteoglycan core molecules, were found to reversibly block development of hydra cell aggregates. Transmission electron microscopy studies indicate that these drugs affect the ultrastructure of the mesoglea. In addition, both polyclonal and monoclonal antibodies raised to isolated mesoglea were found to block development of hydra cell aggregates. These studies indicate that (1) mesoglea formation is rapid and precedes morphogenetic processes during aggregate development, and (2) formation of mesoglea is essential for normal morphogenesis of hydra cell aggregates.