Articular cartilage and synovial joints are critical for skeletal function, but the mechanisms regulating their development are largely unknown. In previous studies we found that the ets transcription factor ERG and its alternatively-spliced variant C-1-1 have roles in joint formation in chick. Here, we extended our studies to mouse. We found that ERG is also expressed in developing mouse limb joints. To test regulation of ERG expression, beads coated with the joint master regulator protein GDF-5 were implanted close to incipient joints in mouse limb explants; this led to rapid and strong ectopic ERG expression. We cloned and characterized several mammalian ERG variants and expressed a human C-1-1 counterpart (hERG3Δ81) throughout the cartilaginous skeleton of transgenic mice, using Col2a1 gene promoter/enhancer sequences. The skeletal phenotype was severe and neonatal lethal, and the transgenic mice were smaller than wild type littermates and their skeletons were largely cartilaginous. Limb long bone anlagen were entirely composed of chondrocytes actively expressing collagen IX and aggrecan as well as articular markers such as tenascin-C. Typical growth plates were absent and there was very low expression of maturation and hypertrophy markers, including Indian hedgehog, collagen X and MMP-13. The results suggest that ERG is part of molecular mechanisms leading chondrocytes into a permanent developmental path and become joint forming cells, and may do so by acting downstream of GDF-5.