Elucidating the signalling pathways that regulate chondrocyte differentiation, such as the actin cytoskeleton and Rho GTPases, during development is essential for understanding of pathological conditions of cartilage, such as chondrodysplasias and osteoarthritis. Manipulation of actin dynamics in tibia organ cultures isolated from E15.5 mice results in pronounced enhancement of endochondral bone growth and specific changes in growth plate architecture. Global changes in gene expression were examined of primary chondrocytes isolated from embryonic tibia, treated with the compounds cytochalasin D, jasplakinolide (actin modifiers) and the ROCK inhibitor Y27632. Cytochalasin D elicited the most pronounced response and induced many features of hypertrophic chondrocyte differentiation. Bioinformatics analyses of microarray data and expression validation by real-time PCR and immunohistochemistry resulted in the identification of the nuclear receptor retinoid related orphan receptor-alpha (Ror-alpha) as a novel putative regulator of chondrocyte hypertrophy. Expression of Ror-alpha target genes, (Lpl, fatty acid binding protein 4 [Fabp4], Cd36 and kruppel-like factor 5 [Klf15]) were induced during chondrocyte hypertrophy and by cytochalasin D and are cholesterol dependent. Stimulation of Ror-alpha by cholesterol results in increased bone growth and enlarged, rounded cells, a phenotype similar to chondrocyte hypertrophy and to the changes induced by cytochalasin D, while inhibition of cholesterol synthesis by lovastatin inhibits cytochalasin D induced bone growth. Additionally, we show that in a mouse model of cartilage specific (Col2-Cre) Rac1, inactivation results in increased Hif-1alpha (a regulator of Rora gene expression) and Ror-alpha(+) cells within hypertrophic growth plates. We provide evidence that cholesterol signalling through increased Ror-alpha expression stimulates chondrocyte hypertrophy and partially mediates responses of cartilage to actin dynamics.