The differentiation of many mesenchyme-derived cells, including cells that form bone and cartilage, is regulated at the level of gene transcription, but many of the factors involved in this regulation remain to be identified. In this study, a modified RNA fingerprinting technique was used to identify the KRAB domain zinc finger transcription factor Zfp60 as a candidate regulator of cell differentiation in mouse calvaria primary cultures. The highest expression of Zfp60 mRNA in vivo was found between embryonic day 11 (E11) and E15 during mouse embryonic development, coinciding with stages of active organ formation. The expression of Zfp60 mRNA and protein was analyzed further in mouse embryos during skeletal development. The most prominent expression was found in prehypertrophic chondrocytes, where it coincides with the expression of key regulators of chondrocyte maturation, Indian hedgehog (Ihh), and the parathyroid hormone-related peptide (PTHrP) receptor. Zfp60 mRNA was also found transiently expressed during chondrogenesis of C1 cells in vitro, preceding collagen type X expression and cellular hypertrophy. Overexpression of Zfp60 inhibited cartilage differentiation in the chondrogenic ATDC5 cell line. These results suggest a role for Zfp60 as a negative regulator of gene transcription, specifically during the development and/or differentiation of chondrocytes.