Endochondral ossification is a highly regulated process that relies on properly orchestrated cell-cell interactions in the developing growth plate. This study is focused on understanding the role of a crucial regulator of cell-cell interactions, the membrane-anchored metalloproteinase ADAM17, in endochondral ossification. ADAM17 releases growth factors, cytokines, and other membrane proteins from cells and is essential for epidermal growth factor receptor (EGFR) signaling and for processing tumor necrosis factor alpha. Here, we report that mice lacking ADAM17 in chondrocytes (A17ΔCh) have a significantly expanded zone of hypertrophic chondrocytes in the growth plate and retarded growth of long bones. This abnormality is caused by an accumulation of the most terminally differentiated type of chondrocytes that produces a calcified matrix. Inactivation of ADAM17 in osteoclasts or endothelial cells does not affect the zone of hypertrophic chondrocytes, suggesting that the main role of ADAM17 in the growth plate is in chondrocytes. This notion is further supported by in vitro experiments showing enhanced hypertrophic differentiation of primary chondrocytes lacking Adam17. The enlarged zone of hypertrophic chondrocytes in A17ΔCh mice resembles that described in mice with mutant EGFR signaling or lack of its ligand transforming growth factor α (TGFα), suggesting that ADAM17 regulates terminal differentiation of chondrocytes during endochondral ossification by activating the TGFα/EGFR signaling axis.