The skeleton is formed by two different mechanisms. In intramembranous ossification, osteoblasts form bone directly, whereas in endochondral ossification, chondrocytes develop a cartilage template, prior to osteoblast-mediated skeletogenesis. Lactoferrin is an iron-binding glycoprotein belonging to the transferrin family. It is known to promote the growth and differentiation of osteoblasts. In this study, we investigated the effects of bovine lactoferrin on the chondrogenic differentiation of ATDC5 chondroprogenitor cells. This mouse embryonic carcinoma-derived clonal cell line provides an in vitro model of chondrogenesis. Lactoferrin treatment of differentiating ATDC5 cells promoted cell proliferation in the initial stage of the differentiation process. However, lactoferrin treatment resulted in inhibition of hypertrophic differentiation, characterized by suppression of alkaline phosphatase activity, aggrecan synthesis and N-cadherin expression. This inhibitory effect was accompanied by sustained Sox9 expression, as well as increased Smad2/3 expression and phosphorylation, suggesting that lactoferrin regulates chondrogenic differentiation by up-regulating the Smad2/3-Sox9 signaling pathway.