Indian hedgehog (Ihh) is indispensable for osteoblast differentiation during embryonic development of the endochondral skeleton. In the absence of Ihh, cells of the osteoblast lineage fail to activate the expression of Runx2, a transcription factor integral to osteoblast differentiation. However, it is hitherto unclear whether the lack of Runx2 expression is solely responsible for the failure of osteoblast formation in Ihh-null embryos. Here, by creating a mouse allele that expresses Runx2 in a Cre-dependent manner, we show that force-expression of Runx2 in the skeletogenic cells restores bone formation in the Runx2-null, but not in the Ihh-null embryo. Thus, the mechanism through which Ihh induces osteoblast differentiation requires other effectors in addition to Runx2.