The role of parathyroid hormone (PTH) upon osteo-/chondrogenic development was investigated in a bone morphogenetic protein (BMP)-dependent differentiation system involving the recombinant expression of BMPs in mesenchymal progenitor cells (C3H10T½). The constitutive expression of the PTH/PTH related protein receptor in this system led to a marked stimulation of chondrogenic and osteogenic development, while the permanent application of the ligand PTH(1–34) resulted in opposite responses by stimulating the early and suppressing the late stages of osteo-/chondrogenic development. These contrasting effects of PTH(1–34) on osteogenic and chondrocytic development seem, therefore, to depend on the cellular state of differentiation. The osteogenic and chondrocytic differentiation potential was substantiated histologically and by genetic analyses of marker genes like c-fos, alkaline phosphatase, osteocalcin, collagen α1(I), and collagen α1(II). The capacity to regulate osteogenic and chondrogenic development is located in the amino-terminal (1–34) region of the PTH molecule and seems to be mediated by the cyclic adenosine monophosphate signaling cascade. The application of other PTH domains like PTH(28–48) and PTH(53–84) did not exhibit significant responses. PTH acts as an essential factor in mesenchymal development controlling rates of differentiation into the osteogenic or chondrogenic lineage. The analysis of PTH effects in this system demonstrates the value of recombinant mesenchymal progenitor cells in the in vitro analysis of osteo-/chondrogenic development.