Chondrogenesis is a major contributor to skeletal development and maintenance, as well as bone repair. Transcriptional coactivator with PDZ-binding motif (TAZ) is a key regulator of osteogenesis and adipogenesis, but how TAZ regulates chondrogenesis and skeletal development remains undefined. Here, we found that TAZ expression is gradually increased during chondrogenic differentiation. Deletion of TAZ in chondrocyte lineage impaired articular and growth plate, as well as the bone development in TAZ-deficient mice. Consistently, loss of TAZ impaired fracture healing. Mechanistically, we found that ectopic expression of TAZ markedly promoted chondroprogenitor proliferation, while deletion of TAZ impaired chondrocyte proliferation and differentiation. TAZ associated with Sox5 to regulate the expression and stability of Sox5 and downstream chondrocyte marker genes' expression. In addition, overexpression of TAZ enhanced Col10a1 expression and promoted chondrocyte maturation, which was blocked by deletion of TAZ. Overall, our findings demonstrated that TAZ is required for skeletal development and joint maintenance that provided new insights into therapeutic strategies for fracture healing, heterotopic ossification, osteoarthritis, and other bone diseases.