Skeletal stem cells (SSCs) that are capable of self-renewal and multipotent differentiation contribute to bone development and homeostasis. Several populations of SSCs at different skeletal sites have been reported. Here, we identify a metaphyseal SSC (mpSSC) population whose transcriptional landscape is distinct from other bone mesenchymal stromal cells (BMSCs). These mpSSCs are marked by Sstr2 or Pdgfrb+Kitl-, located just underneath the growth plate, and exclusively derived from hypertrophic chondrocytes (HCs). These HC-derived mpSSCs have properties of self-renewal and multipotency in vitro and in vivo, producing most HC offspring postnatally. HC-specific deletion of Hgs, a component of the endosomal sorting complex required for transport, impairs the HC-to-mpSSC conversion and compromises trabecular bone formation. Thus, mpSSC is the major source of BMSCs and osteoblasts in bone marrow, supporting the postnatal trabecular bone formation.