The pro-chondrogenic function of runt-related transcription factor 2 (Runx2) was previously considered to be dependent on direct binding with the promoter of Indian hedgehog (Ihh)—the major regulator of chondrocyte differentiation, proliferation, and maturation. The authors’ previous studies identified neural EGFL like 1 (Nell-1) as a Runx2-responsive growth factor for chondrogenic differentiation and maturation. In this study, it was further revealed that the pro-chondrogenic activities of Nell-1 also rely on Ihh signaling, by showing: i) Nell-1 significantly elevated Ihh signal transduction; ii) Nell-1 deficiency markedly reduced Ihh activation in chondrocytes; and iii) Nell-1–stimulated chondrogenesis was significantly reduced by the specific hedgehog inhibitor cyclopamine. Importantly, the authors demonstrated that Nell-1–responsive Ihh signaling and chondrogenic differentiation extended to Runx2 −/− models in vitro and in vivo. In Runx2 −/− chondrocytes, Nell-1 stimulated the expression and signal transduction of Runx3, another transcription factor required for complete chondrogenic differentiation and maturation. Furthermore, knocking down Runx3 in Runx2 −/− chondrocytes abolished Nell-1's stimulation of Ihh-associated molecule expression, which validates Runx3 as a major mediator of Nell-1–stimulated Ihh activation. For the first time, the Runx2→Nell-1→Runx3→Ihh signaling cascade during chondrogenic differentiation and maturation has been identified as an alternative, but critical, pathway for Runx2 to function as a pro-chondrogenic molecule via Nell-1. © 2018 American Society for Investigative Pathology