Chondrocytes emerging in the limb or other locations during embryogenesis are currently considered terminally differentiated cells and thus represent the last stage of differentiation in the chondrogenic cell lineage. Most chondrocytes, however, undergo further major phenotypic changes during late embryogenesis and early postnatal life as they take part in the endochondral ossification process. During this process, "resting" chondrocytes first enter an active, proliferative phase and then develop into large, round hypertrophic chondrocytes with unique phenotypic traits. The question thus arises as to whether hypertrophic chondrocytes actually represent the terminal stage of differentiation in the chondrogenic lineage. To assess the developmental position of these cells along the lineage, we examined the expression of four genes encoding extracellular matrix components in chondrocytes undergoing endochondral ossification in chicken tibial growth cartilage. We found that the steady-state levels of mRNAs coding for proteoglycan core protein increased in regions of cartilage destined for endochondral ossification. Similarly, type II collagen gene expression increased markedly in proliferating chondrocytes and then returned to basal levels in hypertrophic chondrocytes. As revealed by in situ hybridization, type X collagen gene expression was undetectable in resting and early proliferating chondrocytes and was detectable in hypertrophic chondrocytes. Osteonectin synthesis appeared to characterize chondrocytes in the resting, proliferating, and hypertrophic zones of growth cartilage. The protein was scarce, however, and cell-associated in the former zones, although it was very abundant and matrix-associated in the hypertrophic zone. Clearly, the emergence of hypertrophic chondrocytes during endochondral ossification is accompanied by marked quantitative and qualitative changes in gene expression. Interestingly, these changes occur during or immediately after the period of active chondrocyte proliferation. On the premises of the cell lineage definition proposed by Holtzer, the above data suggest that the hypertrophic chondrocytes represent the terminal stage of differentiation in the chondrogenic cell lineage.