The role of major cellular serine/threonine-specific protein phosphatases, protein phosphatase 1 and 2A, was investigated during chicken cartilage differentiation under in vitro conditions. Activity of protein phosphatase 2A decreased parallel to differentiation of chondrogenic cells, whereas activity of protein phosphatase 1 remained unchanged as assayed in the supernatants of the homogenised chicken limb bud micromass cell cultures. When okadaic acid, a potent inhibitor of protein phosphatase 1 and 2A was applied in 20 nM concentration for 4 h during the second and third culturing days, it significantly increased the size of metachromatic cartilage areas measured in 6-day-old colonies. Following okadaic acid treatments, a significant inhibition in the activity of protein phosphatase 2A was found, while the activity of protein phosphatase 1 was unaffected as measured an days 2 and 3. TRITC-phalloidin labelling demonstrated that okadaic acid disorganised actin filaments and induced rounding of chondrogenic cells. This deterioration of actin filaments was reversible. Electron microscopy and biochemical analysis of colonies revealed that the ultrastructure and major components of cartilage matrix remained unchanged under the effect of okadaic acid. Okadaic acid-treatment applied to cultures containing predominantly differentiated chondrocytes (after day 4) did not influence the cartilage formation. 3H-thymidine and bromodeoxyuridine incorporation-assays demonstrated enhanced cell proliferation in the okadaic acid-treated colonies compared to that of the untreated ones. Our results indicate, for the first time, that protein phosphatase 2A is involved in the regulation of chondrogenesis. Inhibition of protein phosphatase 2A with okadaic acid may result in increased chondrogenesis via modulation of proliferation and cytoskeletal organisation, as well as via alteration of protein kinase A-signaling pathway of the chondrogenic cells.