Endochondral ossification in the diaphysis of long bones has been studied in-depth during fetal development but not postnatally in the epiphysis. Immunohistochemical studies revealed that Sox9 and Col2 expressing immature chondrocytes in the epiphysis transition into prehypertrophic and hypetrophic chondrocytes and finally into osteoblasts expressing Col1 and BSP during postnatal day 7-10, when serum levels of thyroid hormone (TH) rise. Lineage tracing using Rosa-td tomato Col2-Cre-ERT2 mice treated with tamoxifen indicated that the same Col2 expressing chondrocytes expressed prehypertrophic, hypertrophic, and subsequently bone formation markers in a sequential manner in euthyroid but not hypothyroid mice, thus providing evidence that chondrocyte to osteoblast transdifferentiation is TH-dependent. Vascular invasion was apparent at the time of bone formation but not earlier. In vitro studies revealed that TH acting via TRα1 promoted expression of SHH while TRβ1 activation increased IHH but inhibited SHH expression. SHH promoted expression of markers of immature chondrocytes but inhibited chondrocyte hypertrophy while IHH promoted chondrocyte hypertrophy. Based on our data, we propose a model in which TH acting through TRα1 and TRβ1, respectively, fine tune levels of SHH and IHH and, thereby control the transit of proliferating immature chondrocytes into mature hypertrophic chondrocytes to become osteoblasts at the epiphysis.