The cell lineage tracing system has been used predominantly in developmental biology studies. The use of Cre recombinase allows for the activation of the reporter in a specific cell line and all progeny. Here, we used the cell lineage tracing technique to demonstrate that chondrocytes directly transform into osteoblasts and osteocytes during long bone and mandibular condyle development using two kinds of Cre, Col10a1-Cre and Aggrecan-CreERT2 (Agg-CreERT2), crossed with Rosa26tdTomato. Both Col10 and aggrecan are well-recognized markers for chondrocytes. On this basis, we developed a new method-cell lineage tracing in conjunction with fluorescent immunohistochemistry-to define cell fate by analyzing the expression of specific cell markers. Runx2 (a marker for early-stage osteogenic cells) and Dentin matrix protein1 (DMP1; a marker for late-stage osteogenic cells) were used to identify chondrocyte-derived bone cells and their differentiation status. This combination not only broadens the application of cell lineage tracing, but also simplifies the generation of compound mice. More importantly, the number, location, and differentiation statuses of parent cell progeny are displayed simultaneously, providing more information than cell lineage tracing alone. In conclusion, the co-application of cell lineage tracing techniques and immunofluorescence is a powerful tool for investigating cell biology in vivo.