When transferred to suspension culture on agarose-coated dishes, dedifferentiated chick embryo chondrocytes resume the chondrocyte phenotype and continue their maturation to hypertrophic chondrocytes (Castagnola, P., G. Moro, F. Descalzi Cancedda, and R. Cancedda. 1986. J. Cell Biol. 102:2310-2317). In this paper we report the identification, purification, and characterization of a low molecular weight protein, named Ch 21, expressed and secreted by in vitro differentiating chondrocytes at a late stage of development. This protein is detectable in the cells after a short pulse labeling and is directly secreted in the culture medium. The Ch 21 protein has a peculiar resistance to limited pepsin digestion; nevertheless it is not collagenous in nature as revealed by its unaltered mobility when isolated from cells grown in the presence of alpha-alpha' dipyridyl, its resistance to bacterial collagenase, and its amino acid composition. By metabolic labeling of tissue slices and by immunohistochemistry, we show that in the chick embryo tibia the Ch 21 protein first appears at the boundary of the cone of hypertrophic cartilage and in the newly formed bone between the 6 and 10 d of embryo development and localizes in calcifying hypertrophic cartilage thereafter. The Ch 21 protein synthesized by the cultured chondrocytes is closely related and possibly identical to a 21K transformation-sensitive protein associated to the cell substratum of chick embryo fibroblasts.