We Have Examined In Vitro The Spontaneous And Regulated Expression Of Phenotypic Characteristics Associated With Differentiated Chondrocytes In An Established Skeletal Cell Line (Cfk2) Derived From Fetal Rat Calvariae. Extended Culture Of Cfk2 Cells Resulted In The Appearance Of Glycosaminoglycans And Type Ii Collagen In The Cell Layer In Association With The Formation Of Focal Nodes Of Cells. In Addition, Induction Of Mrna‐En‐Coding Link Protein, Cartilage‐Specific Proteoglycan Core Protein, And Thrombospondin Was Observed In The Differentiated Population (Dcfk2 Cells). The Expression Of These Mrnas Was Present For At Least Two Passages After Subculturing The Dcfk2 Cells. The Dcfk2 Cells Also Demonstrated Enhanced Parathyroid Hormone (Pth)‐Stimulated Adenylate Cyclase Activity. Proliferation Of Cfk2 Cells Was Stimulated By The Peptide Regulatory Factors Egf And Pth And Inhibited By The Steroidal Agents Dexamethasone And Retinoic Acid. Egf And Retinoic Acid Inhibited The Formation Of Cell Foci And Glycosaminoglycan Deposition And The Expression Of Mrna‐Encoding Link Protein. In Contrast, Pth And Dexamethasone Enhanced The Formation Of Focal Cellular Nodes And Augmented Matrix Deposition And Link Protein Mrna Expression. These Studies Therefore Show That The Cfk2 Cell Line Can Serve As A Nontransformed Model Of Rat Chondrocytic Cells In Which Both Induction And Regulation Of The Expression Of Cartilaginous Matrix Components Can Be Observed. This Line Thereby Provides A Unique Renewable Source Of Chondrocytic Precursor Cells And An Excellent In Vitro Model For Evaluating Temporal And Environmental Control Of Chondrocyte Differentiation And Cartilage Matrix Production.