Among the local signaling pathways that regulate the sequential steps of chondrocyte differentiation is the bone morphogenetic protein (BMP) signaling pathway. We have identified a novel gene, named BIG-3 (BMP-2-induced gene 3 kb) that is expressed in a BMP-regulated fashion in the prechondroblastic cell line MLB13MYC clone 17. BIG-3 is also expressed in proliferating and hypertrophic chondrocytes in the developing growth plate in vivo. We undertook studies to address whether BIG-3 played a functional role in chondrocyte differentiation, using mouse clonal chondrogenic ATDC5 cells. BIG-3 protein levels increased during ITS (insulin, transferrin, sodium selenite)-induced ATDC5 differentiation and in response to BMP-2 treatment. To determine whether stable expression of BIG-3 could alter the program of chondrocytic differentiation, ATDC5 cells were stably transfected with the full-length coding region of BIG-3 (ATDC5-BIG-3) or with the empty vector (ATDC5-EV). Accelerated matrix proteoglycan synthesis was observed in the pooled ATDC5-BIG-3 clones. Alkaline phosphatase and osteopontin mRNA levels were also increased in ATDC5-BIG-3 clones compared with ATDC5-EV clones. Stable expression of BIG-3 also accelerated mineralized matrix formation in both the presence and absence of ITS. These findings, which demonstrate that BIG-3 accelerates chondrocyte differentiation in vitro, combined with the observation that BIG-3 is expressed in the growth plate during embryonic development, suggest that this novel protein is likely to play an in vivo regulatory role in the developing growth plate.