During endochondral bone formation, chondrocyte hypertrophy represents a crucial turning point from chondrocyte differentiation to bone formation. Both parathyroid hormone-related protein (PTHrP) and histone deacetylase 4 (HDAC4) inhibit chondrocyte hypertrophy. Using multiple mouse genetics models, we demonstrate in vivo that HDAC4 is required for the effects of PTHrP on chondrocyte differentiation. We further show in vivo that PTHrP leads to reduced HDAC4 phosphorylation at the 14-3-3–binding sites and subsequent HDAC4 nuclear translocation. The Hdac4-KO mouse shares a similar but milder phenotype with the Pthrp-KO mouse, indicating the possible existence of other mediators of PTHrP action. We identify HDAC5 as an additional mediator of PTHrP signaling. While the Hdac5-KO mouse has no growth plate phenotype at birth, the KO of Hdac5 in addition to the KO of Hdac4 is required to block fully PTHrP action on chondrocyte differentiation at birth in vivo. Finally, we show that PTHrP suppresses myocyte enhancer factor 2 (Mef2) action that allows runt-related transcription factor 2 (Runx2) mRNA expression needed for chondrocyte hypertrophy. Our results demonstrate that PTHrP inhibits chondrocyte hypertrophy and subsequent bone formation in vivo by allowing HDAC4 and HDAC5 to block the Mef2/Runx2 signaling cascade. These results explain the phenotypes of several genetic abnormalities in humans.