Endochondral bone development begins with the formation of a cartilage template. Chondrocytes within this template undergo a progressive program of maturation from proliferative to prehypertrophic chondrocytes to hypertrophic chondrocytes. The progression of cells through these steps of differentiation must be carefully controlled to ensure coordinated growth. Because the Delta/Notch signaling system is known to regulate cell fate choices, we sought to determine if these molecules might be involved in the progressive cell fate decisions that chondocytes undergo. Here we demonstrate in the chick that Delta/Notch signaling negatively regulates progression from the prehypertrophic to hypertrophic state of differentiation. Delta-1 is expressed specifically in the hypertrophic chondrocytes while Notch-2 is expressed in chondrocytes at all stages. Misexpression of Delta-1 using a replication-competent retrovirus blocks chondrocyte maturation. Prehypertrophic cells form normally but do not undergo differentiation to hypertrophic cells, resulting in shortened skeletal elements that lack ossification. We conclude that Delta-1 acts during chondrogenesis to inhibit the transition from prehypertrophic chondrocytes to hypertrophic chondrocytes, thus defining a novel mechanism for the regulation of the chondrocyte maturation program. In addition, these results reveal a new role for Delta/Notch signaling in regulating the progression to a terminally differentiated state.