Bone morphogenetic proteins (BMPs) have been implicated in the regulation of multiple stages of endochondral bone development. BMPs are synthesized as inactive precursors, and activated by removal of the propeptide. The subtilisin-like proprotein convertase (SPC) family comprises seven members [furin/SPC1, PC2/SPC2, PC1/PC3/SPC3, paired basic amino acid-cleaving enzyme 4 (PACE4)/SPC4, PC4/SPC5, PC6/PC5/SPC6, and PC8/PC7/LPC/SPC7], and activates various signaling molecules, including BMPs. In this study, we analyzed the role of this family in chondrogenic differentiation by using the mouse embryonal carcinoma-derived clonal cell line ATDC5. Both SPC-specific inhibitors, decanoyl-Arg-Val-Lys-Arg-chloromethylketone and α1-antitrypsin Portland variant, suppressed chondrogenic differentiation. RT-PCR analysis revealed that PACE4 mRNA levels increased markedly during chondrogenic differentiation, whereas furin expression remained unchanged. Knockdown of PACE4 expression significantly reduced chondrogenic differentiation. Furthermore, proBMP6, which shows an expression pattern similar to that of PACE4, was efficiently processed into its mature form by PACE4, whereas furin could not process proBMP6. These results suggest that PACE4 may regulate the rate of hypertrophic conversion of ATDC5 cells through activation of proBMP6.