Mesenchymal stem cell-derived osteochondroprogenitors express two master transcription factors, SOX9 and RUNX2, during condensation of the skeletal anlagen. They are essential for chondrogenesis and osteogenesis, respectively, and their haploinsufficiency causes human skeletal dysplasias. We show that SOX9 directly interacts with RUNX2 and represses its activity via their evolutionarily conserved high-mobility-group and runt domains. Ectopic expression of full-length SOX9 or its RUNX2-interacting domain in mouse osteoblasts results in an osteodysplasia characterized by severe osteopenia and down-regulation of osteoblast differentiation markers. Thus, SOX9 can inhibit RUNX2 function in vivo even in established osteoblastic lineage. Finally, we demonstrate that this dominant inhibitory function of SOX9 is physiologically relevant in human campomelic dysplasia. In campomelic dysplasia, haploinsufficiency of SOX9 results in up-regulation of the RUNX2 transcriptional target COL10A1 as well as all three members of RUNX gene family. In summary, SOX9 is dominant over RUNX2 function in mesenchymal precursors that are destined for a chondrogenic lineage during endochondral ossification.