All cells, including nonexcitable cells, maintain a discrete transmembrane potential (Vmem), and have the capacity to modulate Vmem and respond to their own and neighbors’ changes in Vmem. Spatiotemporal variations have been described in developing embryonic tissues and in some cases have been implicated in influencing developmental processes. Yet, how such changes in Vmem are converted into intracellular inputs that in turn regulate developmental gene expression and coordinate patterned tissue formation, has remained elusive. Here we document that the Vmem of limb mesenchyme switches from a hyperpolarized to depolarized state during early chondrocyte differentiation. This change in Vmem increases intracellular Ca2+ signaling through Ca2+ influx, via CaV1.2, 1 of L-type voltage-gated Ca2+ channels (VGCCs). We find that CaV1.2 activity is essential for chondrogenesis in the developing limbs. Pharmacological inhibition by an L-type VGCC specific blocker, or limb-specific deletion of CaV1.2, down-regulates expression of genes essential for chondrocyte differentiation, including Sox9, Col2a1, and Agc1, and thus disturbs proper cartilage formation. The Ca2+-dependent transcription factor NFATc1, which is a known major transducer of intracellular Ca2+ signaling, partly rescues Sox9 expression. These data reveal instructive roles of CaV1.2 in limb development, and more generally expand our understanding of how modulation of membrane potential is used as a mechanism of developmental regulation.