The effects of parathyroid hormone/parathyroid hormone-related protein (PTH/PTHrP) on late events in chondrocyte differentiation were investigated by a dual in vitro model where conditions of suspension versus adhesion culturing are permissive either for apoptosis or for the further differentiation of hypertrophic chondrocytes to osteoblast- like cells. Chick embryo hypertrophic chondrocytes maintained in suspension synthesized type II and type X collagen and organized their extracellular matrix, forming a tissue highly reminiscent of true cartilage, which eventually mineralized. The formation of mineralized cartilage was associated with the expression of alkaline phosphatase (ALP), arrest of cell growth, and apoptosis, as observed in growth plates in vivo. In this system, PTH/PTHrP was found to repress type X collagen synthesis, ALP expression, and cartilage matrix mineralization. Cell proliferation was resumed, whereas apoptosis was blocked. Hypertrophic chondrocytes cultured in adherent conditions in the presence of retinoic acid underwent further differentiation to osteoblast-like cells (i.e., they resumed cell proliferation, switched to type I collagen synthesis, and produced a mineralizing bone-like matrix). In this system, PTH addition to culture completely inhibited the expression of ALP and matrix mineralization, whereas cell proliferation and expression of type I collagen were not affected. These data indicate that PTH/PTHrP inhibit both the mineralization of a cartilage-like matrix and apoptosis (mimicked in the suspension culture) and the production of a mineralizing bone-like matrix, characterizing further differentiation of hypertrophic chondrocytes to osteoblasts like cells (mimicked in adhesion culture). Treatment of chondrocyte cultures with PTH/PTHrP reverts cultured cells in states of differentiation earlier than hypertrophic chondrocytes (suspension), or earlier than mineralizing osteoblast-like cells (adhesion). However, withdrawal of hormonal stimulation redirects cells toward their distinct, microenvironment-dependent, terminal differentiation and fate.