Chondrocytes within the growth plates acclimatize themselves to a variety of stresses that might otherwise disturb cell fate. The tumor suppressor PTEN (phosphatase and tensin homolog deleted from chromosome 10) has been implicated in the maintenance of cell homeostasis. However, the functions of PTEN in regulating chondrocytic adaptation to stresses remain largely unknown. In this study, we have created chondrocyte-specific Pten knockout mice (Pten(co/co);Col2a1-Cre) using the Cre-loxP system. Following AKT activation, Pten mutant mice exhibited dyschondroplasia resembling human enchondroma. Cartilaginous nodules originated from Pten mutant resting chondrocytes that suffered from impaired proliferation and differentiation, and this was coupled with enhanced endoplasmic reticulum (ER) stress. We further found that ER stress in Pten mutant chondrocytes only occurred under hypoxic stress, characterized by an upregulation of unfolded protein response-related genes as well as an engorged and fragmented ER in which collagens were trapped. An upregulation of hypoxia-inducible factor 1alpha (HIF1alpha) and downstream targets followed by ER stress induction was also observed in Pten mutant growth plates and in cultured chondrocytes, suggesting that PI3K/AKT signaling modulates chondrocytic adaptation to hypoxic stress via regulation of the HIF1alpha pathway. These data demonstrate that PTEN function in chondrocytes is essential for their adaptation to stresses and for the inhibition of dyschondroplasia.