Parathyroid hormone-related protein (PTHrP) is essential to maintain a pool of dividing, immature chondrocytes in the growth plate of long bones. In chick and mouse, expression of Nkx3.2/Bapx1 in the growth plate is restricted to the proliferative zone and is downregulated as chondrocyte maturation begins. Nkx3.2/Bapx1 expression is lost in the growth plates of mice engineered to lack PTHrP signaling and, conversely, is maintained by ectopic expression of PTHrP in developing bones. Artificially preventing Nkx3.2/Bapx1 downregulation, by forced expression of either retroviral-encoded PTHrP or Nkx3.2 inhibits chondrocyte maturation. Although wild-type Nkx3.2 blocks chondrocyte maturation by acting as a transcriptional repressor, a `reverse function' mutant of Nkx3.2 that has been converted into a transcriptional activator conversely accelerates chondrocyte maturation. Nkx3.2 represses expression of the chondrocyte maturation factor Runx2, and Runx2 misexpression can rescue the Nkx3.2-induced blockade of chondrocyte maturation. Taken together, these results suggest that PTHrP signals block chondrocyte hypertrophy by, in part, maintaining the expression of Nkx3.2/Bapx1, which in turn represses the expression of genes required for chondrocyte maturation.