Foci of chondrocyte hypertrophy that commonly develop in osteoarthritic (OA) cartilage can promote dysregulated matrix repair and pathologic calcification in OA. The closely related chemokines IL-8/CXCL8 and growth-related oncogene alpha (GROalpha)/CXCL1 and their receptors are up-regulated in OA cartilage chondrocytes. Because these chemokines regulate leukocyte activation through p38 mitogen-activated protein kinase signaling, a pathway implicated in chondrocyte hypertrophic differentiation, we tested whether IL-8 and GROalpha promote chondrocyte hypertrophy. We observed that normal human and bovine primary articular chondrocytes expressed both IL-8Rs (CXCR1, CXCR2). IL-8 and the selective CXCR2 ligand GROalpha (10 ng/ml) induced tissue inhibitor of metalloproteinase-3 expression, markers of hypertrophy (type X collagen and MMP-13 expression, alkaline phosphatase activity), as well as matrix calcification. IL-8 and the selective CXCR2 ligand GROalpha also induced increased transamidation activity of chondrocyte transglutaminases (TGs), enzymes up-regulated in chondrocyte hypertrophy that have the potential to modulate differentiation and calcification. Under these conditions, p38 mitogen-activated protein kinase pathway signaling mediated induction of both type X collagen and TG activity. Studies using mouse knee chondrocytes lacking one of the two known articular chondrocyte-expressed TG isoenzymes (TG2) demonstrated that TG2 was essential for murine GROalpha homologue KC-induced TG activity and critically mediated induction by KC of type X collagen, matrix metalloproteinase-13, alkaline phosphatase, and calcification. In conclusion, IL-8 and GROalpha induce articular chondrocyte hypertrophy and calcification through p38 and TG2. Our results suggest a novel linkage between inflammation and altered differentiation of articular chondrocytes. Furthermore, CXCR2 and TG2 may be sites for intervention in the pathogenesis of OA.