During limb development, chondrocytes located at the epiphyseal tip of long bone models give rise to articular tissue, whereas the more numerous chondrocytes in the shaft undergo maturation, hypertrophy, and mineralization and are replaced by bone cells. It is not understood how chondrocytes follow these alternative pathways to distinct fates and functions. In this study we describe the cloning of C-1-1, a novel variant of the ets transcription factor ch-ERG. C-1-1 lacks a short 27–amino acid segment located ∼80 amino acids upstream of the ets DNA binding domain. We found that in chick embryo long bone anlagen, C-1-1 expression characterizes developing articular chondrocytes, whereas ch-ERG expression is particularly prominent in prehypertrophic chondrocytes in the growth plate. To analyze the function of C-1-1 and ch-ERG, viral vectors were used to constitutively express each factor in developing chick leg buds and cultured chondrocytes. We found that virally driven expression of C-1-1 maintained chondrocytes in a stable and immature phenotype, blocked their maturation into hypertrophic cells, and prevented the replacement of cartilage with bone. It also induced synthesis of tenascin-C, an extracellular matrix protein that is a unique product of developing articular chondrocytes. In contrast, virally driven expression of ch-ERG significantly stimulated chondrocyte maturation in culture, as indicated by increases in alkaline phosphatase activity and deposition of a mineralized matrix; however, it had modest effects in vivo. The data show that C-1-1 and ch-ERG have diverse biological properties and distinct expression patterns during skeletogenesis, and are part of molecular mechanisms by which limb chondrocytes follow alternative developmental pathways. C-1-1 is the first transcription factor identified to date that appears to be instrumental in the genesis and function of epiphyseal articular chondrocytes.

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