Cartilage is a dynamic tissue during development, repair, and disease. Within developing endochondral bones, chondrocytes at growth plate edges transition to osteoblasts, adipocytes, and other connective tissue in the marrow cavity, and in diseases such as Multiple Osteochondromas (MO) chondrocytes form abnormally around growth plates and contribute to ectopic bone. On the other hand, the inability to form new chondrocytes to maintain damaged joints contributes to the high incidence of osteoarthritis. In order to assess the ability of zebrafish to regenerate cartilage, we developed a nitroreductase-based cartilage ablation model. Following ablation at larval to adult stages, we observed new chondrocytes forming around the dead cartilage matrix, with cartilage outgrowths in ablated endochondral bones resembling the exostoses of MO. By generating a perichondrium-restricted hyal4:GFP transgenic line, we show that new chondrocytes arise from the perichondrium surrounding the ablated cartilage. In addition, we observe enriched expression of the retinoic acid (RA) synthesis gene aldh1a2 in the perichondrium following ablation, and the RA degrading enzyme gene cyp26b1 in newly forming chondrocytes. Consistent with RA signaling suppressing chondrogenesis, treatment with the RA receptor gamma agonist palovarotene, which has been used to treat MO, prevented ablation-induced chondrogenesis. Although we find that BMP signaling is also required for ablation-induced chondrogenesis, we show a distinct role for RA signaling in suppressing sox9a expression and chondrogenesis. Moreover, palovarotene resulted in a near complete loss of growth plates in uninjured zebrafish, which was due to the precocious dedifferentiation and exit of chondrocytes from the growth plate. Our findings suggest a common chondrocyte suppressive role of RA signaling within the developing growth plates and regenerating perichondrium, which may explain the growth plate defects observed when using RA agonists to treat MO.