ADAMTS-7, a metalloproteinase that belongs to ADAMTS family, is important for the degradation of cartilage extracellular matrix proteins in arthritis. Herein we report that ADAMTS-7 is upregulated during chondrocyte differentiation and demonstrates the temporal and spatial expression pattern during skeletal development. ADAMTS-7 potently inhibits chondrocyte differentiation and endochondral bone formation, and this inhibition depends on its proteolytic activity. The cysteine-rich domain of ADAMTS-7 is required for its interaction with the extracellular matrix, and the C-terminal four-thrombospondin motifs are necessary for its full proteolytic activity and inhibition of chondrocyte differentiation. ADAMTS-7 is an important target of canonical PTHrP signaling, since (i) PTHrP induces ADAMTS-7, (ii) ADAMTS-7 is downregulated in PTHrP null mutant (PTHrP؊/؊) growth plate chondrocytes, and (iii) blockage of ADAMTS-7 almost abolishes PTHrP-mediated inhibition of chondrocyte hypertrophy and endochondral bone growth. ADAMTS-7 associates with granulin-epithelin precursor (GEP), an autocrine growth factor that has been implicated in tissue regeneration, tumorigenesis, and inflammation. In addition, ADAMTS-7 acts as a new GEP convertase and neutralizes GEP-stimulated endochondral bone formation.Collectively, these findings demonstrate that ADAMTS-7, a direct target of PTHrP signaling, negatively regulates endochondral bone formation by associating with and inactivating GEP chondrogenic growth factor.The ADAMTS family consists of secreted zinc metalloproteinases with a precisely ordered modular organization that includes at least one thrombospondin type I repeat (51, 53). Important functions have been established for several members of the ADAMTS family. ADAMTS-1, ADAMTS-4, ADAMTS-5, ADAMTS-8, ADAMTS-9, ADAMTS-16, and ADAMTS-18 degrade the cartilage aggrecan (1,19,36,61,84,88), and ADAMTS-5 plays a primary role in aggrecan loss in arthritis (36, 84). ADAMTS-2, ADAMTS-3, and ADAMTS-14 are procollagen N-propeptidases (18, 30). ADAMTS-2 mutations cause dermatosparaxis, an inherited disorder characterized by severe skin fragility (17). ADAMTS-13 is a von Willebrand factor-cleaving protease, and its mutations lead to heritable life-threatening thrombocytopenic purpura (65). ADAMTS-12 and ADAMTS-7 share the same domain organization and structure and form a subgroup within the ADAMTS family (13, 83). These two enzymes have been found to associate with alpha-2-macroglobulin (13,70,83), and ADAMTS-12 also degrades aggrecan (68). Studies from our group demonstrated that ADAMTS-7 and ADAMTS-12 directly associate with and degrade COMP, a prominent noncollagenous component of cartilage (66,67). COMP is a 524-kDa, pentameric, disulfide-bonded, multidomain glycoprotein composed of approximately equal subunits (ϳ110 kDa each) (43,75). Although the function of COMP is not completely understood, it appears to mediate chondrocyte attachment by an integrin receptor (15,29), and accumulating evidence suggests that COMP may function to stabilize...