During the process of endochondral bone formation, proliferating chondrocytes give rise to hypertrophic cells, which then deposit a mineralized matrix to form calcified cartilage prior to replacement by bone. Previously, we reported that a clonal cell line, ATDC5, undergoes efficient chondrogenic differentiation through a cellular condensation stage. Here we report that the differentiated ATDC5 cells became hypertrophic at the center of cartilage nodules, when the cells ceased to grow. Formation of hypertrophic chondrocytes took place in association with type X collagen gene expression and a dramatic elevation of alkaline phosphate (ALPase) activity. After 5 weeks of culture, mineralization of the culture could be discerned as Alizarin red-positive spots, which spread throughout the nodules even in the absence of beta-glycerophosphate. Electron microscopy and electron probe microanalysis revealed that calcification was first initiated at matrix vesicles in the territorial matrix and that it advanced progressively along the collagen fibers in a manner similar to that which occurs in vivo. The infrared spectrum of the mineralized nodules indicated two absorption doublets around 1030 cm-1 and 600 cm-1, which are characteristic of apatitic mineral. Calcifying cultures of ATDC5 cells retained responsiveness to parathyroid hormone (PTH): PTH markedly inhibited elevation of ALPase activity and calcification in the culture in a dose-dependent manner. Thus, we demonstrated that ATDC5 cells keep track of the multistep differentiation process encompassing the stages from mesenchymal condensation to calcification in vitro. ATDC5 cells provide an excellent model to study the molecular mechanism underlying regulation of cartilage differentiation during endochondral bone formation.