During endochondral bone formation, vascular invasion into cartilage initiates the replacement of cartilage by bone. Chondromodulin-I, a 25 kDa glycoprotein purified from bovine epiphyseal cartilage, was recently identified as a novel endothelial cell growth inhibitor. Here we cloned the mouse chondromodulin-I cDNA from a mouse whole embryo cDNA library. Northern blot analysis revealed that the chondromodulin-I transcripts were expressed in association with the formation of cartilage expressing type II collagen from days 11 to 17 of gestation in mouse embryos, at which time cartilaginous bone rudiments were gradually replaced by bone. Chondromodulin-I mRNA was also detected in the thymus and eyes at a lower level. In situ hybridization revealed significant expression in all cartilaginous tissues in the embryos at days 13.5 and 16 of gestation. However, the expression was completely abolished in the hypertrophic cartilage zone prior to calcification. Upon chondrogenic differentiation of mouse ATDC5 cells in vitro, the expression of chondromodulin-I transcripts was induced concomitantly with the formation of type II collagen-expressing chondrocytes. The expression of the transcripts then declined as type X collagen-expressing hypertrophic chondrocytes appeared in the culture. Purified chondromodulin-I protein inhibited the vascular invasion into cartilage ectopically induced by demineralized bone matrix in nude mice, leading to the suppression of bone formation in vivo. These results suggest that chondromodulin-I is involved in the anti-angiogenic property of cartilage, and that the withdrawal of its expression allows the vascular invasion which triggers the replacement of cartilage by bone during endochondral bone development.