Activating transcription factor 4 (Atf4) is a leucine-zipper-containing protein of the cAMP response element-binding protein (CREB) family. Ablation of Atf4 (Atf4(-/-)) in mice leads to severe skeletal defects, including delayed ossification and low bone mass, short stature and short limbs. Atf4 is expressed in proliferative and prehypertrophic growth plate chondrocytes, suggesting an autonomous function of Atf4 in chondrocytes during endochondral ossification. In Atf4(-/-) growth plate, the typical columnar structure of proliferative chondrocytes is disturbed. The proliferative zone is shortened, whereas the hypertrophic zone is transiently expanded. The expression of Indian hedgehog (Ihh) is markedly decreased, whereas the expression of other chondrocyte marker genes, such as type II collagen (Col2a1), PTH/PTHrP receptor (Pth1r) and type X collagen (Col10a1), is normal. Furthermore, forced expression of Atf4 in chondrocytes induces endogenous Ihh mRNA, and Atf4 directly binds to the Ihh promoter and activates its transcription. Supporting these findings, reactivation of Hh signaling pharmacologically in mouse limb explants corrects the Atf4(-/-) chondrocyte proliferation and short limb phenotypes. This study thus identifies Atf4 as a novel transcriptional activator of Ihh in chondrocytes that paces longitudinal bone growth by controlling growth plate chondrocyte proliferation and differentiation.