Endochondral ossification is a carefully orchestrated process mediated by promoters and inhibitors of mineralization. Phosphatases are implicated, but their identities and functions remain unclear. Alkaline phosphatase (TNAP) plays a crucial role promoting mineralization of the extracellular matrix by restricting the concentration of the calcification inhibitor inorganic pyrophosphate (PPi). Mutations in the TNAP gene cause hypophosphatasia, a heritable form of rickets and osteomalacia. Here we show that PHOSPHO1, a phosphatase with specificity for phosphoethanolamine and phosphocholine, plays a functional role in the initiation of calcification and that ablation of PHOSPHO1 and TNAP function prevents skeletal mineralization. Phospho1−/− mice display growth plate abnormalities, spontaneous fractures, bowed long bones, osteomalacia, and scoliosis in early life. Primary cultures of Phospho1−/− tibial growth plate chondrocytes and chondrocyte-derived matrix vesicles (MVs) show reduced mineralizing ability, and plasma samples from Phospho1−/− mice show reduced levels of TNAP and elevated plasma PPi concentrations. However, transgenic overexpression of TNAP does not correct the bone phenotype in Phospho1−/− mice despite normalization of their plasma PPi levels. In contrast, double ablation of PHOSPHO1 and TNAP function leads to the complete absence of skeletal mineralization and perinatal lethality. We conclude that PHOSPHO1 has a nonredundant functional role during endochondral ossification, and based on these data and a review of the current literature, we propose an inclusive model of skeletal calcification that involves intravesicular PHOSPHO1 function and Pi influx into MVs in the initiation of mineralization and the functions of TNAP, nucleotide pyrophosphatase phosphodiesterase-1, and collagen in the extravesicular progression of mineralization. © 2011 American Society for Bone and Mineral Research.