Extracellular matrix (ECM) is an intricate network composed of an array of macromolecules, the importance of which is becoming increasingly apparent. The ECM is an integral part of the machinery that regulates cell function; its role in cell differentiation and tissue-specific gene expression, although essential, is not yet understood. It can act as a positive as well as a negative regulator of functional differentiation depending on the cell type and the genes studied. It also acts in a hierarchical fashion, exacting higher and higher degrees of stringency to achieve full functional differentiation. Regulation by ECM is closely interrelated with the action of other regulators of cellular function, such as growth factors and hormones. But ECM may exert its regulation of gene expression by mechanisms distinct from those known for soluble transcription factors. In this short review, we describe three systems in which ECM has been shown to play a crucial role in functional differentiation, but we emphasize m...