During the process of differentiation, chondrocytes integrate a complex array of signals from local or systemic factors like parathyroid hormone-related peptide (PTHrP), Indian hedgehog, bone morphogenetic proteins and transforming growth factor beta. While PTHrP is known to be a critical regulator of chondrocyte proliferation and differentiation, the signaling pathways through which this factor acts remain to be elucidated. Here we show that both cAMP response element-binding protein (CREB) and AP-1 activation are critical to PTHrP signaling in chondrocytes. PTHrP treatment leads to rapid CREB phosphorylation and activation, while CREB DNA binding activity is constitutive. In contrast, PTHrP induces AP-1 DNA binding activity through induction of c-Fos protein expression. PTHrP activates CRE and TRE reporter constructs primarily through PKA-mediated signaling events. Both signaling pathways were found to be important mediators of PTHrP effects on chondrocyte phenotype. Alone, PTHrP suppresses maturation and stimulates proliferation of the chondrocyte cultures. However, in the presence of dominant negative inhibitors of CREB and c-Fos, these PTHrP effects were suppressed, and chondrocyte maturation was accelerated. Moreover, in combination, the effects of dominant negative c-Fos and CREB are synergistic, suggesting interaction between these signaling pathways during chondrocyte differentiation.