The sequence of events that leads to the formation of a functionally graded enthesis is not clearly defined. The current study demonstrates that clonal expansion of Gdf5 progenitors contributes to linear growth of the enthesis. Prior to mineralization, Col1+ cells in the enthesis appose Col2+ cells of the underlying primary cartilage. At the onset of enthesis mineralization, cells at the base of the enthesis express alkaline phosphatase, Indian hedgehog, and ColX as they mineralize. The mineralization front then extends towards the tendon midsubstance as cells above the front become encapsulated in mineralized fibrocartilage over time. The hedgehog (Hh) pathway regulates this process, as Hh-responsive Gli1+ cells within the developing enthesis mature from unmineralized to mineralized fibrochondrocytes in response to activated signaling. Hh signaling is required for mineralization, as tissue-specific deletion of its obligate transducer Smoothened in the developing tendon and enthesis cells leads to significant reductions in the apposition of mineralized fibrocartilage. Together, these findings provide a spatiotemporal map of events – from expansion of the embryonic progenitor pool to synthesis of the collagen template and finally mineralization of this template – that leads to the formation of the mature zonal enthesis. These results can inform future tendon-to-bone repair strategies to create a mechanically functional enthesis in which tendon collagen fibers are anchored to bone through mineralized fibrocartilage.