Coordinated proliferation and differentiation of growth plate chondrocytes is required for normal growth and development of the endochondral skeleton, but little is known about the intracellular signal transduction pathways regulating these processes. We have investigated the roles of the GTPase RhoA and its effector kinases ROCK1/2 in hypertrophic chondrocyte differentiation. RhoA, ROCK1, and ROCK2 are expressed throughout chondrogenic differentiation. RhoA overexpression in chondrogenic ATDC5 cells results in increased proliferation and a marked delay of hypertrophic differentiation, as shown by decreased induction of alkaline phosphatase activity, mineralization, and expression of the hypertrophic markers collagen X, bone sialoprotein, and matrix metalloproteinase 13. These effects are accompanied by activation of cyclin D1 transcription and repression of the collagen X promoter by RhoA. In contrast, inhibition of Rho/ROCK signaling by the pharmacological inhibitor Y27632 inhibits chondrocyte proliferation and accelerates hypertrophic differentiation. Dominant-negative RhoA also inhibits induction of the cyclin D1 promoter by parathyroid hormone-related peptide. Finally, Y27632 treatment partially rescues the effects of RhoA overexpression. In summary, we identify the RhoA/ROCK signaling pathway as a novel and important regulator of chondrocyte proliferation and differentiation.