From a traditional viewpoint, skeletal elements form by two distinct processes: endochondral ossification, during which a cartilage template is replaced by bone, and intramembranous ossification, whereby mesenchymal cells differentiate directly into osteoblasts. There are inherent difficulties with this historical classification scheme, not the least of which is that bones typically described as endochondral actually form bone through an intramembranous process, and that some membranous bones may have a transient chondrogenic phase. These innate contradictions can be circumvented if molecular and cellular, rather than histogenic, criteria are used to describe the process of skeletal tissue formation. Within the past decade, clinical examinations of human skeletal syndromes have led to the identification and subsequent characterization of regulatory molecules that direct chondrogenesis and osteogenesis in every skeletal element of the body. In this review, we survey these molecules and the tissue interactions that may regulate their expression. What emerges is a new paradigm, by which we can explain and understand the process of normal- and abnormal-skeletal development.