Endochondral ossification is initiated by the differentiation of mesenchymal precursor cells to chondrocytes. This process is characterized by a strong interdependence of cell shape and cytoskeletal organization accompanying the onset of chondrogenic gene expression, but the molecular mechanisms mediating these interactions are not known. In this study, we hypothesized that the activation of matrix metalloproteinase (MMP)-2 would be involved in the reorganization of the actin cytoskeleton and that this would require an Akt-dependent signaling pathway in chick wing bud mesenchymal cells. The pharmacological inhibition of Akt signaling resulted in decreased glycosaminoglycan synthesis and reduced the level of active MMP-2, leading to suppressed cortical actin organization which is characteristic of differentiated chondrocytes. In addition, the exposure of cells to bafilomycin A1 reversed these chondro-inhibitory effects induced by inhibition of Akt signaling. In conclusion, our data indicate that Akt signaling is involved in the activation of MMP-2 and that this Akt-induced activation of MMP-2 is responsible for reorganization of the actin cytoskeleton into a cortical pattern with parallel rounding of chondrogenic competent cells.