The mRNA level of basic helix-loop-helix transcription factor DEC1 (BHLHB2)/Stra13/Sharp2 was up-regulated during chondrocyte differentiation in cultures of ATDC5 cells and growth plate chondrocytes, and in growth plate cartilage in vivo. Forced expression of DEC1 in ATDC5 cells induced chondrogenic differentiation, and insulin increased this effect of DEC1 overexpression. Parathyroid hormone (PTH) and PTH-related peptide (PTHrP) suppressed DEC1 expression and the differentiation of ATDC5 cells, but DEC1 overexpression antagonized this inhibitory action of PTH/PTHrP. Transforming growth factor- or bone morphogenetic protein-2, as well as insulin, induced DEC1 expression in ATDC5 cultures where it induced chondrogenic differentiation. In pellet cultures of bone marrow mesenchymal stem cells exposed to transforming growth factor- and insulin, DEC1 was induced at the earliest stage of chondrocyte differentiation and also at the hypertrophic stage. Overexpression of DEC1 in the mesenchymal cells induced the mRNA expressions of type II collagen, Indian hedgehog, and Runx2, as well as cartilage matrix accumulation; overexpression of DEC1 in growth plate chondrocytes at the prehypertrophic stage increased the mRNA levels of Indian hedgehog, Runx2, and type X collagen, and also increased alkaline phosphatase activity and mineralization. To our knowledge, DEC1 is the first transcription factor that can promote both chondrogenic differentiation and terminal differentiation.The development of the vertebrate long bones occurs through the process of endochondral ossification, which is initiated in the embryo with the condensation of mesenchymal cells and then progresses with their commitment and differentiation into chondrogenic cells. By the late embryonic stage, the epiphyseal growth plate has developed with distinguishable, well organized and spatially distinct zones of resting, proliferating, and post-proliferative hypertrophic chondrocytes. The hypertrophic cartilage calcifies and is invaded by capillaries, and is subsequently replaced by new bone (1). Recent studies have identified several transcription factors involved in endochondral ossification. Among these, Sox9 is required for the condensation of prechondrogenic mesenchymal cells, and Sox5 and Sox6, as well as Sox9, are required for the activation of type II collagen expression during chondrogenesis (2). In addition, different sets of Smads are involved in stimulation or inhibition of chondrocyte hypertrophy by transforming growth factor- (TGF-) superfamily members (3, 4). Runx2/Cbfa1/AML3/PEBP2␣-A is essential for intramembranous ossification, and mutations in this gene are responsible for cleidocranial dysplasia, a syndrome characterized by open fontanelles and hypoplastic clavicles (5-8). Furthermore, Runx2 plays a crucial role in endochondral ossification. In Runx2-deficient mice, chondrocyte hypertrophy, mineralization, and vascular invasion are suppressed in most parts of the skeleton (9 -13). On the other hand, little is known about the role of the bas...