The growth arrest and DNA damage-inducible 45 (GADD45) gene product has been implicated in the stress response, cell cycle arrest, and apoptosis. Here we demonstrated the unexpected expression of GADD45 in the embryonic growth plate and uncovered its novel role as an essential mediator of matrix metalloproteinase-13 (MMP-13) expression during terminal chondrocyte differentiation. We identified GADD45 as a prominent early response gene induced by bone morphogenetic protein-2 (BMP-2) through a Smad1/Runx2-dependent pathway. Because this pathway is involved in skeletal development, we examined mouse embryonic growth plates, and we observed expression of Gadd45 mRNA coincident with Runx2 protein in pre-hypertrophic chondrocytes, whereas GADD45 protein was localized prominently in the nucleus in late stage hypertrophic chondrocytes where Mmp-13 mRNA was expressed. In Gadd45 ؊/؊ mouse embryos, defective mineralization and decreased bone growth accompanied deficient Mmp-13 and Col10a1 gene expression in the hypertrophic zone. Transduction of small interfering RNA-GADD45 in epiphyseal chondrocytes in vitro blocked terminal differentiation and the associated expression of Mmp-13 and Col10a1 mRNA in vitro. Finally, GADD45 stimulated MMP-13 promoter activity in chondrocytes through the JNK-mediated phosphorylation of JunD, partnered with Fra2, in synergy with Runx2. These observations indicated that GADD45 plays an essential role during chondrocyte terminal differentiation.Growth arrest and DNA damage-inducible (GADD) 4 45 is a member of the GADD45 family of small (18 kDa) proteins, also including GADD45␣ and GADD45␥. The GADD45 family is known to be associated with cell growth control, apoptotic cell death, and the cellular response to DNA damage (1, 2). Initially, GADD45, encoded by MyD118, was identified as a myeloid differentiation primary response gene activated by IL-6 in murine myeloid leukemia cells upon induction of terminal differentiation (1, 3). More recently, GADD45, which is induced by TGF- in a SMAD-dependent manner, has been identified as a positive regulator of TGF--induced apoptosis (4). Although GADD45␣ has been identified on DNA microarrays as prominently expressed genes in chondrocytes from adult articular cartilage and in chondrosarcoma or immortalized chondrocyte cell lines (5, 6), a role for GADD45 family members, including GADD45, during cartilage development has not been reported previously.Formation of the vertebrate skeleton through endochondrial ossification, involving progressive differentiation of proliferating chondrocytes to growth-arrested hypertrophic cells, is one of the most complex processes in biology. In the embryonic or postnatal growth plate, terminal chondrocyte differentiation occurs during conversion of cartilage to a vascularized tissue that supports matrix remodeling, cartilage calcification, and recruitment of osteogenic precursors. Cascades of growth and differentiation factors act through positive and negative signaling kinases and transcription factors to t...