Transforming growth factor ß (TGF-ß) has well-documented roles in chondrocyte maturation and endochondral ossification, but the mechanisms of TGF-ß activation during these processes remain unclear. In this study, we analyzed TGF-ß activation in chick embryo resting, proliferating, and hypertrophic chondrocytes in culture. We found that both levels and activation of TGF-ß increased substantially with maturation. The majority of TGF-ß produced by resting cells over culture time remained latent, but a larger portion produced by proliferating and hypertrophic cells was activated with increasing maturation. Zymography of gelatin gels revealed that matrix metalloprotease 2 (MMP-2) and MMP-9 were expressed by each population and that MMP-13 characterized hypertrophic chondrocytes and to a lesser extent proliferating chondrocytes in late cultures. Treatment with pharmacologic agents revealed that both MMPs and serine proteases are involved in activation. However, because inhibition of MMPs almost completely prevented TGF-ß activation, MMPs appear crucial for activation. During culture, inclusion of the tetracycline-derived, collagenase/gelatinase inhibitor chemically modified nonantimicrobial tetracycline (CMT-8) at concentrations specific for MMP-13 inhibition resulted in complete inhibition of TGF-ß activation by proliferating and hypertrophic chondrocytes. These results show that TGF-ß production, release, and activation are regulated developmentally in chondrocytes. Our findings point to a strict mode of regulation of this potent factor to elicit diverse and highly specific effects during chondrocyte maturation and ossification.