In osteoarthritis, the tightly controlled balance of matrix synthesis and degradation is disrupted, resulting in progressive breakdown of articular cartilage. At the cellular level, normal articular chondrocytes express collagen II and aggrecan, two major components of healthy cartilage matrix (1). In osteoarthritic cartilage, chondrocyte function is deregulated, such that expression of Col2 in the superficial layer is reduced (2) and expression of the matrix degrading protease MMP-13 is increased (3, 4). As of yet, the inciting molecular events and pathways involved in this progressive loss of articular chondrocyte homeostasis in osteoarthritis are not completely understood. TGF-β plays a well-established role in the control of chondrocyte differentiation, matrix synthesis, and homeostasis. Disruption of TGF-β signaling results in accelerated chondrocyte terminal differentiation, both in vitro and in vivo (5). Not only is an osteoarthritic phenotype observed in mice that express a dominant negative TGF-β type II receptor, but also in mice with systemic ablation of Smad3 (6), a key effector of TGF-β signaling. Other mouse models in which levels of functional Smad3 are reduced, such as mice that overexpress a Smad-degrading protease, Smurf2 (7), also exhibit an arthritic phenotype. Importantly, human polymorphisms in the Smad3 gene have been implicated in hip and knee arthritis, providing further evidence of the involvement of TGF-β/Smad3 in osteoarthritis (8). The mechanism through which TGF-β/Smad3 regulates chondrocyte differentiation in the growth plate has been extensively studied. Smad3 plays a well-established role in the perichondrium, where it participates in a feedback loop that inhibits terminal differentiation of growth plate chondrocytes (9–11). Specifically, chondrocyte-derived Indian hedgehog (Ihh) stimulates TGF-β signaling through Smad2/3 in the perichondrium, which, in turn, induces parathyroid hormone-related protein (PTHrP)-mediated repression of chondrocyte hypertrophy. Though the progression of osteoarthritis recapitulates some aspects of growth plate chondrocyte differentiation, these two processes are not identical. Unlike growth plate chondrocytes, articular chondrocytes are not regulated by perichondrial signaling. A distinct, chondrocyte-intrinsic role of Smad3 is supported by the articular cartilage defects in Smad3-deficient mice. However, systemic loss of Smad3 affects multiple tissues and cell types (12–15), complicating the interpretation of results. Several in vitro studies provide further evidence for chondrocyte-intrinsic Smad3 signaling (11, 16), though mechanisms by which Smad3 mediates the effects of TGF-β, such as its ability to maintain chondrocyte homeostasis, remain unclear. MMP-13, a matrix metalloproteinase (MMP), is expressed at high levels in osteoarthritic cartilage (3, 4). Since MMP-13 cleaves key extracellular matrix constituents, including collagen II and aggrecan, its expression and activity are tightly regulated. One of the important regulatory regions of the MMP-13 promoter is the Runx2 binding site, which has been implicated in the TGF-β-inducible expression of MMP-13 in breast cancer cells and osteoblasts (17, 18). TGF-β has also been shown to repress MMP-13 expression, though the mechanisms remain unclear (19). We previously showed that TGF-β activates Smad3 to repress Runx2-inducible Runx2 and osteocalcin expression in osteoblasts (20). This led us to hypothesize that Smad3 also represses Runx2-inducible gene expression in chondrocytes, and that this regulatory mechanism is required to prevent MMP-13-mediated degeneration of articular cartilage. To test this hypothesis, we generated Col2-Cre;Smad3fl/fl mice, which are deficient in Smad3 in chondrocytes, but not in perichondrial cells or other tissues. Molecular analysis of articular cartilage phenotypes revealed an increase in MMP-13 levels in Smad3-deficient cartilage. Therefore, we utilized primary articular chondrocytes and ATDC5 chondroprogenitor cells to investigate the chondrocyte-intrinsic mechanisms by which Smad3 regulates the expression of MMP-13. Because MMP-13 is a driver of arthritic cartilage degeneration, understanding its regulation by Smad3 elucidates mechanisms by which Smad3 maintains chondrocyte homeostasis and prevents osteoarthritis.