In the developing growth plate, periarticular chondrocytes proliferate, differentiate into columnar chondrocytes, and then further differentiate into postmitotic hypertrophic chondrocytes. Parathyroid hormone-related (PTH-related) protein (PTHrP), regulated by Indian hedgehog (Ihh), prevents premature hypertrophic differentiation, thereby maintaining the length of columns. Ihh regulates cartilage development through PTHrP-independent pathways as well. Here we show that Ihh stimulates differentiation of periarticular to columnar chondrocytes (periarticular chondrocyte differentiation) and thereby regulates the length of columns independently of PTHrP. Mosaic ablation of the PTH/PTHrP receptor in the growth plate caused upregulation of Ihh action, PTHrP upregulation, acceleration of periarticular chondrocyte differentiation, and elongation of the columnar region. Decreasing Ihh action in these mice reduced elongation of columns, whereas decreasing PTHrP showed only a modest effect on column length. Overexpression of Ihh caused PTHrP upregulation, elongation of columns, and acceleration of periarticular chondrocyte differentiation. PTHrP heterozygosity in this model had a minimal effect on the elongation of columns. Moreover, the elongation of columns and stimulation of periarticular chondrocyte differentiation in these models were still observed when PTHrP signaling was maintained so that it remained constant. These results demonstrate that Ihh acts on periarticular chondrocytes to stimulate their differentiation, thereby regulating the columnar cell mass independently of PTHrP.