Endochondral bone formation occurs by a series of developmentally regulated cellular events from initial formation of cartilage tissue to stages of calcified cartilage, resorption, and replacement by bone tissue. Several studies have raised the question of the possibility that the hypertrophic chondrocytes associated with the calcifying cartilage matrix can acquire properties similar to osteoblasts. We have addressed this possibility by measuring synthesis within hypertrophic chondrocytes in vitro of two bone-related proteins, osteopontin and osteocalcin. Chondrocytes derived from chick embryo ventral vertebral tissue were cultured under conditions that promoted extracellular matrix mineralization and differentiation towards the hypertrophic phenotype as indicated by the induction of Type X collagen, alkaline phosphatase, and diminished expression of Type II collagen and the core protein of large proteoglycan. In these cultures, osteopontin synthesis was detected in early cultures in the absence of a calcified matrix; in contrast, an absence of the bone-specific protein osteocalcin was observed. However, with onset of development of the hypertrophic phenotype an induction of protein expression for osteocalcin was observed with a significant (twofold) increase in osteopontin. Maximal levels of osteocalcin synthesis occurred with the peak of alkaline phosphatase activity and Type X collagen mRNA levels. The levels of osteocalcin synthesis were induced fiftyfold from the earliest level of detection but this level was only one one-hundredth of that observed for mature chick osteoblast cultures. Osteocalcin and osteopontin were characterized by several criteria (electrophoresis, immunoblotting, chromatographic characteristics, and response to 1,25(OH)2D3) which confirmed their molecular properties as being identical to osteoblast synthesized proteins. The coordinate change in the cellular phenotype to the hypertrophic chondrocyte was shown to be concurrent with ultrastructural maturation of the cells and the accumulation of osteocalcin and osteopontin in the extracellular matrix associated with hydroxyapatite at sites of mineralization. Since the ultrastructural features of the cells in vitro and the extracellular matrix surrounding the lacunae have features of the hypertrophic chondrocyte and associated matrix in vivo, the induction of the bone-specific protein osteocalcin suggests that at least a population of these cells may develop osteoblastic phenotypic markers in association with mineralizing matrix. The detection of osteocalcin and the high level of synthesis of osteopontin may represent an advanced stage of chondrocyte hypertrophy or the possibility of a trans-differentiation of the chondrocytes to an osteoblastic-like cell.