The formation of the vertebrate skeletal elements relies on the differentiation of the required cell types, chondrocytes and osteoblasts, which are derived from a common mesenchymal precursor. Furthermore it requires coordination between maturation of chondrocytes and osteoblasts to enable proper growth and development of skeletal elements. Over the past years various transcription factors have been identified on the basis of in vivo and in vitro studies that play important roles for skeletal formation being either active in chondrocytes or osteoblasts or even in both cell types. In this article their mode of action in skeletal development and how their activity is controlled are reviewed.