Insulin-like growth factor-I (IGF-I) is a critical regulator of skeletal growth. While IGF-I has been shown to be a potent chondrocyte mitogen in vitro, its role in chondrocyte differentiation is less well characterized. We chose to study the action of IGF-I on an accepted model of chondrocyte differentiation, the ATDC5 cell line. Insulin concentrations sufficiently high to interact with the IGF-I receptor are routinely used to induce ATDC5 cells to differentiate. Therefore, we first examined the ability of IGF-I to promote chondrocyte differentiation at physiological concentrations. IGF-I could induce differentiation of these cells at concentrations below 10 nM. However, increasing IGF-I concentrations were less potent at inducing differentiation. We hypothesized that mitogenic effects of IGF-I might inhibit its differentiating effects. Indeed, the extracellular-signal-regulated kinase (ERK)-pathway inhibitor PD98059 inhibited ATDC5 cell DNA synthesis while enhancing differentiation. This suggested that the ability of IGF-I to promote both proliferation and differentiation might require that its signaling be modulated through the differentiation process. We therefore compared IGF-I-mediated ERK activation in proliferating and hypertrophic chondrocytes. IGF-I potently induced ERK activation in proliferating cells, but minimal ERK response was seen in hypertrophic cells. In contrast, IGF-I-mediated Akt activation was unchanged by differentiation, indicating intact upstream IGF-I receptor signaling. Similar findings were observed in the RCJ3.1C5.18 chondrogenic cell line and in primary chick chondrocytes. We conclude that IGF-I promotes both proliferation and differentiation of chondrocytes and that the differentiation effects of IGF-I may require uncoupling of signaling to the ERK pathway.