Fibroblast growth factor receptor 3 (FGFR3) plays a critical role in the control of endochondral ossification, and bone growth and mutations that cause hyperactivation of FGFR3 are responsible for a collection of developmental disorders that feature poor endochondral bone growth. FGFR3 is expressed in proliferating chondrocytes of the cartilaginous growth plate but also in chondrocytes that have exited the cell cycle and entered the prehypertrophic phase of chondrocyte differentiation. Achondroplasia disorders feature defects in chondrocyte proliferation and differentiation, and the defects in differentiation have generally been considered to be a secondary manifestation of altered proliferation. By initiating a mutant activated knockin allele of FGFR3 (FGFR3K650E) that causes Thanatophoric Dysplasia Type II (TDII) specifically in prehypertrophic chondrocytes, we show that mutant FGFR3 induces a differentiation block at this stage independent of any changes in proliferation. The differentiation block coincided with persistent expression of SOX9, the master regulator of chondrogenesis, and reducing SOX9 dosage allowed chondrocyte differentiation to proceed and significantly improved endochondral bone growth in TDII. These findings suggest that a proliferation-independent and SOX9-dependent differentiation block is a key driving mechanism responsible for poor endochondral bone growth in achondroplasia disorders caused by mutations in FGFR3.