Abstract. The expression of tissue transglutaminase in skeletal tissues is strictly regulated and correlates with chondrocyte differentiation and cartilage calcification in endochondral bone formation and in maturation of tracheal cartilage (Aeschlimann, D., A. Wetterwald, H. Fleisch, and M. Paulsson. 1993. J. Cell Biol. 120:1461-1470). We now demonstrate the transglutaminase reaction product, the 3,-glutamyl-e-lysine cross-link, in the matrix of hypertrophic cartilage using a novel cross-link specific antibody. Incorporation of the synthetic transglutaminase substrate monodansylcadaverine (amine donor) in cultured tracheal explants reveals enzyme activity in the pericellular matrix of hypertrophic chondrocytes in the central, calcifying areas of the horseshoe-shaped cartilages.One predominant glutaminyl substrate (amine acceptor) in the chondrocyte matrix is osteonectin as revealed by incorporation of the dansyl label in culture. Indeed, nonreducible osteonectin-containing complexes of *65, 90, and 175 kD can be extracted from mature tracheal cartilage. In vitro cross-linking of osteonectin by tissue transglutaminase gives similar products of ,,o90 and 175 kD, indicating that the complexes in cartilage represent osteonectin oligomers. The demonstration of extracellular transglutaminase activity in differentiating cartilage, i.e., cross-linking of osteonectin in situ, shows that tissue transglutaminasecatalyzed cross-linking is a physiological mechanism for cartilage matrix stabilization.ONG bone development and growth occurs by endochondral ossification (Hunziker and Schenk, 1989;Solursh, 1989). In this process chondrocytes pass through a series of differentiation stages in which they rapidly proliferate, synthesize matrix constituents at high rate and become hypertrophic, before the cartilage matrix calcifies. The calcified matrix is subsequently replaced by bone. The differentiating chondrocytes also change their repertoire of biosynthetic products and express e.g., collagen X, osteopontin, and osteonectin (for references see Aeschlimann et al., 1993). Rat tracheal cartilage undergoes maturation and calcification in a manner resembling chondrocyte differentiation during endochondral bone formation (Aeschlimann et al., 1993), with the exception that matrix calcification is not followed by cartilage resorption, vascularization, and bone formation.Dr. Aeschlimann's present address is