In vivo, fibroblast growth factor-2 (FGF-2) inhibits longitudinal bone growth. Similarly, activating FGF receptor 3 mutations impair growth in achondroplasia and thanatophoric dysplasia. To investigate the underlying mechanisms, we chose a fetal rat metatarsal organ culture system that would maintain growth plate histological architecture. Addition of FGF-2 to the serum-free medium inhibited longitudinal growth. We next assessed each major component of longitudinal growth: proliferation, cellular hypertrophy, and cartilage matrix synthesis. Surprisingly, FGF-2 stimulated proliferation, as assessed by [3H]thymidine incorporation. However, autoradiographic studies demonstrated that this increased proliferation occurred only in the perichondrium, whereas decreased labeling was seen in the proliferative and epiphyseal chondrocytes. FGF-2 also caused a marked decrease in the number of hypertrophic chondrocytes. To assess cartilage matrix synthesis, we measured 35SO4 incorporation into newly synthesized glycosaminoglycans. Low concentrations (10 ng/ml) of FGF-2 stimulated cartilage matrix production, but high concentrations (1000 ng/ml) inhibited matrix production. We conclude that FGF-2 inhibits longitudinal bone growth by three mechanisms: decreased growth plate chondrocyte proliferation, decreased cellular hypertrophy, and, at high concentrations, decreased cartilage matrix production. These effects may explain the impaired growth seen in patients with achondroplasia and related skeletal dysplasias.