AbstractAMDM, a form of osteochondrodysplasia, is due to the loss‐of‐function mutations in NPR‐B gene. This study investigated the functional involvement of CNP‐3, chick homolog of human CNP, and its receptor NPR‐B in chondrogenesis utilizing the micromass culture of the chick limb mesenchymal cells. Results revealed CNP‐3 and NPR‐B expression in the chick limb bud making stage‐specific peak levels first at Hamburger‐Hamilton stage 23–24, and second at stage 30–31, corresponding to pre‐chondrogenic mesenchymal condensation and initiation of chondrogenic maturation‐hypertrophy in vivo, respectively. CNP‐3 and NPR‐B expression in vitro increased parallel to collagen type X expression, but not to that of collagen type II. Treatment of cultures with CNP significantly increased N‐cadherin, and collagen type X expression, glycosaminoglycan synthesis and chondrogenesis. Collagen type II expression was not significantly affected. Thus, results implicated CNP‐3/NPR‐B signaling in pre‐chondrogenic mesenchymal condensation, glycosaminoglycan synthesis and late differentiation of chondrocytes in the process of endochondral ossification. J. Cell. Biochem. 105: 227–235, 2008. © 2008 Wiley‐Liss, Inc.