Differentiation of hypertrophic chondrocytes toward an osteoblast-like phenotype occurs in vitro when cells are transferred to anchorage-dependent culture conditions in the presence of ascorbic acid (Descalzi Cancedda, F., C. Gentili, P. Manduca, and R. Cancedda. 1992. J. Cell Biol. 117:427-435). This process is enhanced by retinoic acid addition to the culture medium. Here we compare the growth of hypertrophic chondrocytes undergoing this differentiation process to the growth of hypertrophic chondrocytes maintained in suspension culture as such. The proliferation rate is significantly higher in the adherent hypertrophic chondrocytes differentiating to osteoblast-like cells. In cultures supplemented with retinoic acid the proliferation rate is further increased. In both cases cells stop proliferating when mineralization of the extracellular matrix begins. We also report on the ultrastructural organization of the osteoblast-like cell cultures and we show virtual identity with cultures of osteoblasts grown from bone chips. Cells are embedded in a dense meshwork of type I collagen fibers and mineral is observed in the extracellular matrix associated with collagen fibrils. Differentiating hypertrophic chondrocytes secrete large amounts of an 82-kD glycoprotein. The protein has been purified from conditioned medium and identified as ovotransferrin. It is transiently expressed during the in vitro differentiation of hypertrophic chondrocytes into osteoblast-like cells. In cultured hypertrophic chondrocytes treated with 500 nM retinoic acid, ovotransferrin is maximally expressed 3 d after retinoic acid addition, when the cartilage-bone-specific collagen shift occurs, and decays between the 5th and the 10th day, when cells have fully acquired the osteoblast-like phenotype. Similar results were obtained when retinoic acid was added to the culture at the 50 nM "physiological" concentration. Cells expressing ovotransferrin also coexpress ovotransferrin receptors. This suggests an autocrine mechanism in the control of chondrocyte differentiation to osteoblast-like cells.