Type-1 PTH/PTH-related peptide receptors (PTH1Rs), which activate both adenylyl cyclase and phospholipase C (PLC), control endochondral bone development by regulating chondrocyte differentiation. To directly analyze PTH1R function in such cells, we isolated conditionally transformed clonal chondrocytic cell lines from tibial growth plates of neonatal mice heterozygous for PTH1R gene ablation. Among 104 cell lines isolated, messenger RNAs for PTH1R, collagen II, and collagen X were detected in 28%, 90%, and 29%, respectively. These cell lines were morphologically diverse. Some appeared large, rounded, and enveloped by abundant extracellular matrix; whereas others were smaller, flattened, and elongated. Two PTH1R-expressing clones showed similar PTH1R binding and cAMP responsiveness to PTH and PTH-related peptide but disparate morphologic features, characteristic of hypertrophic (hC1--5) or nonhypertrophic (nhC2--27) chondrocytes, respectively. hC1--5 cells expressed messenger RNAs for collagen II and X, alkaline phosphatase (ALP), and matrix GLA protein, whereas nhC2--27 cells expressed collagen II and Indian hedgehog but not collagen X or ALP. In hC1--5 cells, PTH and cAMP analog, but not phorbol ester, inhibited both ALP and mineralization. PTH1R-null hC1--5 subclones were isolated by in vitro selection and then reconstituted by stable transfection with wild-type PTH1Rs or mutant (DSEL) PTH1Rs defective in PLC activation. ALP and mineralization were inhibited similarly via both forms of the receptor. These results indicate that PLC activation is not required for PTH1R regulation of mineralization or ALP in hypertrophic chondrocytes and are consistent with a major role for cAMP in regulating differentiation of hypertrophic chondrocytes.