Chondrocyte differentiation is a fundamental process during endochondral ossification. Several factors regulate maturation via the activity of downstream signaling pathways that target specific transcription factors and regulate chondrocyte-specific genes. In this study, we investigated the mechanisms involved in the regulation of chick lower sternal chondrocyte maturation upon stimulation by retinoic acid (RA) and the bone morphogenetic protein BMP2. RA-induced Runx2 in lower sternal chondrocyte cultures and over-expression of wild-type (WT) Runx2 enhanced colX and alkaline phosphatase activity, while over-expression of dominant negative Runx2 was inhibitory. Furthermore, WT Runx2 enhanced the effects of both BMP2 and RA on colX expression, while the effects of both growth factors were completely blocked in cultures over-expressing dominant negative Runx2. Similarly, WT Runx2 enhanced the induction of colX by Smad1. Smad1 and Runx2 were found to act cooperatively at the chicken type X collagen promoter and elimination of either the putative Smad binding site or Runx2 binding site eliminated responsiveness to BMP2, RA, or either of the transcription factors. Altogether the results show cross talk between the BMP-associated Smads and Runx2 during chondrocyte differentiation and dependence upon both signals for induction of the type X collagen promoter. Factors or signals that alter either of these transcription factors regulate the rate of chondrocyte differentiation. © 2003 Wiley-Liss, Inc.