Skeletal development is a highly sophisticated process in which the expression of a variety of growth factors, signaling molecules, and extracellular matrix proteins is spatially and temporally orchestrated. In the present study, we show that ADAM10, a transmembrane protease that is critically involved in the functional regulation of various membrane-bound molecules, plays an essential role in the longitudinal growth of long bones and in skeletal development. We found that mutant mice lacking ADAM10 in osteochondroprogenitors exhibited marked growth retardation and had shorter long bones than the control mice. Histomorphometric analysis revealed that the mutant mice had a shorter hypertrophic zone and that their hypertrophic chondrocytes were smaller in size than those of the control mice. Unexpectedly, we found that the mRNA expression of the chemokine CXCL12 and its receptor CXCR4 were significantly reduced in cartilage tissues lacking ADAM10. Further, exogenous supplementation of recombinant CXCL12 rescued the defect in the ADAM10-deficient growth plate in an ex vivo culture model. Taken together, our data show a previously unknown role for ADAM10 in skeletal development that involves its regulation of the CXCL12 and CXCR4 signaling pathway.