Endochondral ossification in bone development and repair, and in induced bone formation in mesenchymal tissues, involves recruitment of mesenchymal cells, their differentiation into chondrocytes, and calcification of the cartilagenous matrix. Stimulation of proteoglycan synthesis is used as a biochemical marker of chondrogenesis, however it does not distinguish among chondrogenic phenotypes. Chondrocytes derived from the resting zone and adjacent growth zone cartilage of the costochondral junction of young rats, produce matrix vesicles in culture which are enriched in alkaline phosphatase specific activity with respect to the plasma membrane. Matrix vesicles isolated from cultures of neonatal rat muscle mesenchymal cells are not enriched in this enzyme activity. Alkaline phosphatase in matrix vesicles produced by growth zone chondrocytes is stimulated by 1,25(OH)2D3; enzyme in matrix vesicles produced by resting zone chondrocytes is stimulated by 24,25(OH)2D3; enzyme in matrix vesicles isolated from mesenchymal cell cultures is responsive to neither metabolite. Matrix vesicle phospholipase A2 is stimulated by 1,25(OH)2D3 in growth zone chondrocytes cultures; inhibited by 24,25(OH)2D3 in resting zone chondrocyte cultures; and is unaffected by either metabolite in mesenchymal cell cultures. These observations suggest that matrix vesicle production, as defined by alkaline phosphatase enrichment, and responsiveness of matrix vesicle enzymes to vitamin D metabolites, can be used as markers of phenotypic maturation during chondrogenesis in vivo and in vitro.