One G protein-coupled receptor (GPCR) can activate more than one G protein, but the physiologic importance of such activation has not been demonstrated in vivo. We have generated mice expressing exclusively a mutant form of the PTH/PTHrP receptor (DSEL) that activates adenylyl cyclase normally but not phospholipase C (PLC). DSEL mutant mice exhibit abnormalities in embryonic endochondral bone development, including delayed ossification and increased chondrocyte proliferation. Analysis of the differentiation of embryonic metatarsals in vitro shows that PTH(1–34) and forskolin inhibit, whereas active phorbol ester stimulates, hypertrophic differentiation. Thus, PLC signaling via the PTH/PTHrP receptor normally slows the proliferation and hastens the differentiation of chondrocytes, actions that oppose the dominant effects of PTH/PTHrP receptors and that involve cAMP-dependent signaling pathways.