Data obtained while investigating growth plate chondrocyte differentiation during endochondral bone formation both in vivo and in vitro indicate that initial chondrogenesis depends on positional signaling mediated by selected homeobox-containing genes and soluble mediators. Continuation of the process strongly relies on interactions of the differentiating cells with the microenvironment, that is, other cells and extracellular matrix. Production of and response to different hormones and growth factors are observed at all times and autocrine and paracrine cell stimulations are key elements of the process. Particularly relevant is the role of the TGF-beta superfamily, and more specifically of the BMP subfamily. Other factors include retinoids, FGFs, GH, and IGFs, and perhaps transferrin. The influence of local microenvironment might also offer an acceptable settlement to the debate about whether hypertrophic chondrocytes convert to bone cells and live, or remain chondrocytes and die. We suggest that the ultimate fate of hypertrophic chondrocytes may be different at different microanatomical sites.