Chondromodulin-I (Chm-I) is a glycoprotein that stimulates the growth of chondrocytes and inhibits angiogenesis in vitro. Mice lacking the Chm1 gene show abnormal bone metabolism and pathological angiogenesis in cardiac valves in the mature stage although they develop normally without aberrations in endochondral bone formation during embryogenesis or in cartilage development during growth. These findings indicate that Chm-I is critical under conditions of stress such as bone repair through endochondral ossification of a fracture callus. We carried out the present study to examine the expression and role of Chm-I in bone repair using a stabilized tibial fracture model, and compared fracture healing in Chm1 knockout (Chm1(-/-)) mice with that in wild-type mice. Chm-I mRNA and protein localized in the external cartilaginous callus in the reparative phase of fracture healing. Radiological examination showed a delayed union in Chm1(-/-) mice although the fracture site was covered with both external and internal calluses. Chm1 null mutation reduced external cartilaginous callus formation as judged by marked decrease of type X collagen alpha 1 (Col10a1) expression and the total amount of cartilage matrix. Interestingly, the majority of chondrocytes in the periosteal callus failed to differentiate into mature chondrocytes in Chm1(-/-) mice, while the hypertrophic maturation of chondrocytes between the cortices was not affected. These results suggest that Chm-I is involved in hypertrophic maturation of periosteal chondrocytes. Although a direct effect of Chm-I on bones is still unclear, bony callus formation was increased while external cartilaginous callus decreased in Chm1(-/-) mice. We conclude that in the absence of Chm1, predominant primary bone healing occurs due to an indirect effect induced by reduction of cartilaginous callus rather than to a direct effect on osteogenic function, resulting in a delayed union.