To test the hypothesis that PTH-related peptide (PTHrP) is a paracrine regulator of endochondral bone development, we localized PTHrP and its cognate receptor during normal skeletal development at both messenger RNA (mRNA) and protein levels and compared the growth plate phenotypes of PTHrP-deficient [(PTHrP(-/-)] mice to those of normal littermates [PTHrP(+/+]. PTHrP mRNA was expressed adjacent to uncavitated joints, in the perichondrium of long bones and to a lower level in proliferating chondrocytes. In contrast, PTHrP protein was most evident at the interface of proliferating and hypertrophic zones, where it colocalized with PTH/PTHrP receptor mRNA and protein. Most strikingly, the proliferating zone was dramatically shorter in PTHrP(-/-) cartilage, although the percentage of cells in S-phase of the cell cycle in the proliferating zone was indistinguishable between PTHrP(+/+) and PTHrP(-/-) mice. Terminal differentiation of chondrocytes, which was characterized by cell hypertrophy, apoptosis (DNA fragmentation and decreased bcl-2 mRNA expression), and matrix mineralization, was more advanced in growth cartilage of PTHrP(-/-), compared with PTHrP(+/+) animals. These data demonstrate that PTHrP acts principally as a paracrine factor, which promotes elongation of endochondral bone by restraining or delaying the pace of chondrocytic development and terminal differentiation of growth-plate chondrocytes.