Mesenchymal cell (MC) condensation or the aggregation of MCs precedes chondrocyte differentiation and is required for subsequent cartilage formation during endochondral ossification. In this study, we used micromass cultures of C3H10T1/2 cells as an in vitro model system for studying MC condensation and the events important for this process. Transforming growth factor β1 (TGF-β1) served as the initiator of MC condensation in our model system and we were interested in determining whether CTGF functions as a downstream mediator of TGF-β1. CTGF is a matricellular protein that has been found to be expressed in MC condensations and in the perichondrium. Micromass cultures of C3H10T1/2 cells condensed under TGF-β1 stimulation concomitant with dramatic up-regulation of CTGF mRNA and protein levels. CTGF silencing by either CTGF siRNA or CTGF antisense oligonucleotide approaches showed that TGF-β1-induced condensation was CTGF dependent. Furthermore, silencing of CTGF expression resulted in significant reductions in cell proliferation and migration, events that are crucial during MC condensation. In addition, up-regulation of Fibronectin (FN) and suppression of Sox9 expression by TGF-β1 was also found to be mediated by CTGF. Immunofluorescence of developing mouse vertebrae showed that CTGF, TGF-β1 and FN were co-expressed in condensations of MCs, while Sox9 expression was low at this stage. During subsequent chondrogenesis, Sox9 expression was high in chondrocytes while CTGF expression was limited to the perichondrium. Thus, CTGF is an essential downstream mediator of TGF-β1-induced MC condensation through its effects on cell proliferation and migration. CTGF is also involved in up-regulating FN and suppressing Sox9 expression during TGF-β1 induced MC condensation. J. Cell. Physiol. 210: 398–410, 2007. © 2006 Wiley-Liss, Inc.