Bone development is regulated by conserved signalling pathways that are linked to multifunctional growth factors and their high affinity receptors. Parathyroid hormone-related peptide (PTHrP) and fibroblast growth factor receptor 3 (FGFR3) have been shown to play pivotal, and sometimes complementary, roles in the replication, maturation and death of chondrocytes during endochondral bone formation. To gain further insight into how these pathways coordinate cartilage and bone development, we generated mice lacking expression of both PTHrP and FGFR3. The phenotype of compound mutant mice resembled that of their PTHrP-deficient littermates with respect to neonatal lethality, facial dysmorphism and foreshortening of the limbs. The absence of PTHrP in the developing epiphyseal cartilage of PTHrP-/- and PTHrP-/-/FGFR3-/- mice resulted in a dominant hypo-proliferative phenotype. However, abnormalities such as the presence of nonhypertrophic cells among hypertrophic chondrocytes and excessive apoptosis seen in the hypertrophic zone of PTHrP-/- mice were absent in the PTHrP-/-/FGFR3-/- mice. Furthermore, the absence of FGFR3 in single and compound mutant mice led to decreased expression of vascular endothelial growth factor (VEGF) and an increase in depth of hypertrophic chondrocytes. These observations indicate that FGFR3 deficiency can rescue some of the defects seen in PTHrP-deficient mice and that it plays an important role in the regulation of chondrocyte differentiation and hypertrophy. These studies support a dominant role for PTHrP in regulating the pool of proliferating cells during limb development and suggest that signalling by FGFR3 plays a more prominent role in cartilage maturation and vascular invasion at the chondro-osseous junction.