MEL1 (MDS1/EVI1-like gene 1/PRDM16), a zinc finger protein, is located near the chromosomal breakpoint at 1p36 in human acute myeloid leukemia (AML) cells with the t (1; 3) (p36; q21) translocation. Mel1/Prdm16 is not only a causative gene of leukemia, but also has multiple regulatory functions, such as the regulation of fat metabolism. To investigate the function of Mel1/Prdm16, we generated Mel1/Prdm16-deficient mice, but homozygous deficiency (Mel1/Prdm16-/-) was embryonic lethal at E 11.5. Heterozygous mice showed abnormal cartilage and bone formation in the postnatal skull and long bones, suggesting that Mel1/Prdm16 expression plays an important role in bone development. In osteoblast and chondrocyte cell lines, Mel1/Prdm16 promotes the differentiation of chondrocytes and regulates the differentiation of osteoblasts. Transient repression of the master regulator Runx2 is required for chondrocyte differentiation at an early stage of differentiation. However, in Mel1/Prdm16-suppressed ATDC5 cells, the initial suppression of Runx2 was lacking and its expression was upregulated at the beginning of differentiation, suggesting that chondrogenic differentiation is suppressed in Mel1/Prdm16+/- mesenchymal progenitor cells because Runx2 expression is upregulated during the early stage of differentiation. Thus, the Mel1/Prdm16 gene may be involved in the early repression of Runx2 expression during osteochondral differentiation and promote chondrogenic differentiation.