The aggregation of chondroprogenitor mesenchymal cells into precartilage condensation represents one of the earliest events in chondrogenesis. N-cadherin is a key cell adhesion molecule implicated in chondrogenic differentiation. Recently, ADAM10-mediated cleavage of N-cadherin has been reported to play an important role in cell adhesion, migration, development and signaling. However, the significance of N-cadherin cleavage in chondrocyte differentiation has not been determined. In the present study, we found that the protein turnover of N-cadherin is accelerated during the early phase of chondrogenic differentiation in ATDC5 cells. Therefore, we generated the subclones of ATDC5 cells overexpressing wild-type N-cadherin, and two types of subclones overexpressing a cleavage-defective N-cadherin mutant, and examined the response of these cells to insulin stimulation. The ATDC5 cells overexpressing cleavage-defective mutants severely prevented the formation of cartilage aggregates, proteoglycan production and the induction of chondrocyte marker gene expression, such as type II collagen, aggrecan and type X collagen. These results suggested that the cleavage of N-cadherin is essential for chondrocyte differentiation. (C) 2010 Elsevier Inc. All rights reserved.