Link protein (LP), an extracellular matrix protein in cartilage, stabilizes aggregates of aggrecan and hyaluronan, giving cartilage its tensile strength and elasticity. Cartilage provides the template for endochondral ossification and is crucial for determining the length and width of the skeleton. During endochondral bone formation, hypertrophic chondrocytes die and the cartilage is replaced with bone matrix. Here, we have generated targeted mutations in mice in the gene encoding LP (Crtl1). Homozygotes showed defects in cartilage development and delayed bone formation with short limbs and craniofacial anomalies. Most Crtl1(tm1Nid/tm1Nid) mice died shortly after birth due to respiratory failure, but some survived and developed progressive dwarfism and lordosis of the cervical spine. They showed small epiphysis, slightly flared metaphysis of long bones and flattened vertebrae, characteristic of spondyloepiphyseal dysplasias. The cartilage contained significantly reduced aggrecan depositions in the hypertrophic zone, and decreased numbers of prehypertrophic and hypertrophic chondrocytes. Reduced Indian hedgehog (Ihh) expression was observed in prehypertrophic chondrocytes, and apoptosis was inhibited in hypertrophic chondrocytes. These results indicate that LP is important for the formation of proteoglycan aggregates and normal organization of hypertrophic chondrocytes, and suggest that cartilage matrix has a role in chondrocyte differentiation and maturation.