In mammals, growth of long bones occurs at the growth plate, a cartilage structure that contains three principal layers: the resting, proliferative, and hypertrophic zones. The function of the resting zone is not well understood. We removed the proliferative and hypertrophic zones from the rabbit distal ulnar growth plate in vivo, leaving only the resting zone. Within 1 wk, a complete proliferative and hypertrophic zone often regenerated. Next, we manipulated growth plates in vivo to place resting zone cartilage ectopically alongside the proliferative columns. Ectopic resting zone cartilage induced a 90-degree shift in the orientation of nearby proliferative zone chondrocytes and seemed to inhibit their hypertrophic differentiation. Our findings suggest that resting zone cartilage makes important contributions to endochondral bone formation at the growth plate: 1) it contains stem-like cells that give rise to clones of proliferative chondrocytes; 2) it produces a growth plate-orienting factor, a morphogen, that directs the alignment of the proliferative clones into columns parallel to the long axis of the bone; and 3) it may also produce a morphogen that inhibits terminal differentiation of nearby proliferative zone chondrocytes and thus may be partially responsible for the organization of the growth plate into distinct zones of proliferation and hypertrophy.