Extracellular inorganic phosphate (P i ) concentrations are the highest in the growth plate just before the onset of mineralization. The study reported here demonstrates that P i not only is required for hydroxyapatite mineral formation but also modulates terminal differentiation and apoptosis of growth plate chondrocytes. Extracellular P i stimulated terminal differentiation marker gene expression, including the progressive ankylosis gene (ank), alkaline phosphatase (APase), matrix metalloproteinase-13 (MMP-13), osteocalcin, and runx2, mineralization, and apoptosis of growth plate chondrocytes. The stimulatory effect of extracellular P i on terminal differentiation and apoptosis events of growth plate chondrocytes was dependent on the concentration, the expression levels of type III Na + /P i cotransporters, and ultimately P i uptake. A high extracellular P i concentration was required for the stimulation of apoptosis, whereas lower P i concentrations were required for the most effective stimulation of terminal differentiation events, including terminal differentiation marker gene expression and mineralization. Suppression of Pit-1 was sufficient to inhibit the stimulatory effects of extracellular P i on terminal differentiation events. On the other hand, increasing the local extracellular P i concentration by overexpressing ANK, a protein transporting intracellular PP i to the extracellular milieu where it is hydrolyzed to P i in the presence of APase, resulted in marked increases of hypertrophic and early terminal differentiation marker mRNA levels, including APase, runx2 and type X collagen, and slight increase of MMP-13 mRNA levels, but decreased osteocalcin mRNA level, a late terminal differentiation markers. In the presence of levamisole, a specific APase inhibitor to prevent hydrolysis of extracellular PP i to P i , ANK overexpression of growth plate chondrocytes resulted in decreased mRNA levels of hypertrophic and terminal differentiation markers but increased MMP-13 mRNA levels. In conclusion, with extracellular PP i inhibiting and extracellular P i stimulating hypertrophic and terminal differentiation events, a precise regulation of PP i /P i homeostasis is required for the spatial and temporal control of terminal differentiation events of growth plate chondrocytes.