The knee joint consists of multiple interacting tissues that are prone to injury‐ and disease‐related degeneration. Although much is known about the structure and function of the knee's constituent tissues, relatively little is known about their cellular origin and the mechanisms governing their segregation. To investigate the origin and segregation of knee tissues in vivo we performed lineage tracing using a Col2a1‐Cre/R26R mouse model system and compared the data obtained with actual Col2a1 expression. These studies demonstrated that at E13.5 the interzone at the presumptive joint site forms when cells within the Col2a1‐expressing anlagen cease expression of Col2a1 and not through cellular invasion into the anlagen. Later in development these interzone cells form the cruciate ligament and inner medial meniscus of the knee. At E14.5, after interzone formation, cells that had never expressed Col2a1 appeared in the joint and formed the lateral meniscus. Furthermore, cells with a Col2a1‐positive expression history combined with the negative cells to form the medial meniscus. The invading cells started to express Col2a1 1 week after birth, resulting in all cells within the meniscus synthesizing collagen II. These findings support a model of knee development in which cells present in the original anlagen combine with invading cells in the formation of this complex joint.