The ability of tendon to transmit forces from muscle to bone is directly attributable to an extracellular matrix (ECM) containing parallel bundles of collagen fibrils. Although the biosynthesis of collagen is well characterized, how cells deposit the fibrils in regular parallel arrays is not understood. Here we show that cells in the tendon mesenchyme are nearly cylindrical and are aligned side by side and end to end along the proximal-distal axis of the limb. Using three-dimensional reconstruction electron microscopy, we show that the cells have deep channels in their plasma membranes and contain bundles of parallel fibrils that are contiguous from one cell to another along the tendon axis. A combination of electron microscopy, microarray analysis, and immunofluorescence suggested that the cells are held together by cadherin-11-containing cell-cell junctions. Using a combination of RNA interference and electron microscopy, we showed that knockdown of cadherin-11 resulted in cell separation, loss of plasma membrane channels, and misalignment of the collagen fibrils in the ECM. Our results show that tendon formation in the developing limb requires precise regulation of cell shape via cadherin-11-mediated cell-cell junctions and coaxial alignment of plasma membrane channels in longitudinally stacked cells. Copyright © 2007, American Society for Microbiology. All Rights Reserved.