The perichondrial ossification groove of Ranvier, a circumferential groove in the periphery of the epiphyseal cartilage, was studied in rabbits whose ages ranged from one week to eight months using light and electron microscopy, autoradiography after labeling with 3H-thymidine, 3H-proline, and 3H-glucosamine, and histochemical staining for proteoglycans and alkaline phosphatase. By these methods, three groups of cells were identified within the groove: 1. A group of densely packed cells deep in the groove, which are the progenitor cells for the osteoblasts that form the bone bark, a cuff of bone surrounding the epiphyseal growth-plate region and the adjacent part of the metaphysis. 2. A group of more widely dispersed, relatively undifferentiated mesenchymal cells and fibroblasts, some of which are chondroblast precursors that probably contribute to appositional chondrogenesis and growth in width of the epiphyseal cartilage. 3. Fibroblasts and fibrocytes among sheets of highly oriented and organized collagen fibers which form a fibrous layer that is continuous with the outer fibrous layer of the periosteum and with the perichondrium. This layer also sends fibers into the epiphyseal cartilage and anchors the periosteum firmly to the epiphyses as bone growth proceeds.