Matrix Gla protein (MGP) is a 14-kD extracellular matrix protein of the mineral-binding Gla protein family. Studies of MGP-deficient mice suggest that MGP is an inhibitor of extracellular matrix calcification in arteries and the epiphyseal growth plate. In the mammalian growth plate, MGP is expressed by proliferative and late hypertrophic chondrocytes, but not by the intervening chondrocytes. To investigate the functional significance of this biphasic expression pattern, we used the ATDC5 mouse chondrogenic cell line. We found that after induction of the cell line with insulin, the differentiating chondrocytes express MGP in a stage-specific biphasic manner as in vivo. Treatment of the ATDC5 cultures with MGP antiserum during the proliferative phase leads to their apoptosis before maturation, whereas treatment during the hypertrophic phase has no effect on chondrocyte viability or mineralization. After stable transfection of ATDC5 cells with inducible sense or antisense MGP cDNA constructs, we found that overexpression of MGP in maturing chondrocytes and underexpression of MGP in proliferative and hypertrophic chondrocytes induced apoptosis. However, overexpression of MGP during the hypertrophic phase has no effect on chondrocyte viability, but it does reduce mineralization. This work suggests that coordinated levels of MGP are required for chondrocyte differentiation and matrix mineralization.