A unique feature of vertebrate embryonic development is the formation of the skeletal system, which not only fulfills mechanical, supportive, and protective roles, but also regulates several important homeostatic processes systemically in adult animals. The skeletal system is a mesoderm-derived organ and its formation starts from mesenchymal condensations, in which skeletal precursor cells, also known as osteochondral progenitors, give rise to either chondrocytes to form the cartilage or osteoblasts to form the bone. This difference in the initial fate choices of osteochondral progenitors also determines whether ossification is endochondral or intramembranous. Like all other organogenetic processes, the development of skeletons, although mostly mineralized in adult lives, is controlled by tightly regulated programs of cell proliferation, differentiation, survival, and organization. In this review, we will discuss the entire embryonic developmental processes of the skeletal system. This review will particularly focus on how cell-cell signaling and transcription factors regulate multiple aspects of skeletal development.