Fracture repair is the best-characterized situation in which activation of chondrogenesis takes place in an adult organism. To better understand the mechanisms that regulate chondrogenic differentiation of mesenchymal progenitor cells during fracture repair, we have investigated the participation of transcription factors L-Sox5, Sox6, and Sox9 in this process. Marked up-regulation of L-Sox5 and Sox9 messenger RNA (mRNA) and smaller changes in Sox6 mRNA levels were observed in RNAse protection assays during early stages of callus formation, followed by up-regulation of type II collagen production. During cartilage expansion, the colocalization of L-Sox5, Sox6, and Sox9 by immunohistochemistry and type II collagen transcripts by in situ hybridization confirmed a close relationship of these transcription factors with the chondrocyte phenotype and cartilage production. On chondrocyte hypertrophy, production of L-Sox5, Sox9 and type II collagen were down-regulated markedly and that of type X collagen was up-regulated. Finally, using adenovirus mediated bone morphogenetic protein 2 (BMP-2) gene transfer into fracture site we showed accelerated up-regulation of the genes for all three Sox proteins and type II collagen in fractures treated with BMP-2 when compared with control fractures. These data suggest that L-Sox5, Sox6, and Sox9 are involved in the activation and maintenance of chondrogenesis during fracture healing and that enhancement of chondrogenesis by BMP-2 is mediated via an L-Sox5/Sox6/Sox9-dependent pathway.