Molecular and behavioural characterisation of ovine dermal papilla cells performed in this study indicate they synthesise a highly specialised extracellular matrix (ECM). This is conserved between different species and distinguishes papilla cells from dermal fibroblasts with which they have a common origin. The composition of the dermal papilla ECM is temporally and spatially regulated during wool follicle development. It was shown that the ECM associated with dermal papilla cells in foetal sheep skin becomes specialised in regard to chondroitin sulphate synthesis prior to the appearance of follicle primordia. Chrondroitin sulphate and fibronectin were present in the ECM of dermal papilla cells throughout follicle development and during fibre production. Cellular differentiation antigen 44 was present in the ECM od papilla cells exclusively during the formation of dermal papilla, while laminin was present in the dermal papilla ECM of fibre producing follicles only. Co-operation between chondroitin sulphate, fibronectin, and CD44 in regulating the agrregative and proliferative behaviour of papilla cells was demonstrated in culture. Finally, the inhibition of proteoglycan synthesis in newborn mouse skin was found to disrupt the growth of existing follicles and the generation of new ones. Together these findings demonstrate that chondroitin sulphate is intimately associated with the earliest interactions between epithelial and mesenchymal cells during the formation of follicle primordia. It is likely that the interactions specifically involve fibronectin and CD44, and possibly other ECM molecules which have he effect of regulating the behaviour of papilla cells / Doctor of Philosophy (PhD)