Chondrocyte differentiation is a principal progress in endochondral ossification and in the formation of secondary ossification center (SOC) during the long bone development. We have previously reported that targeted deletion of Wnt1 in mesenchymal progenitors (Wnt1_Prrx^−/−) leads to spontaneous fractures and severe osteopenia in mouse long bones, suggesting that Wnt1 is a key regulator of bone metabolism. However, the effect of Wnt1 on the regulation of cartilage development and chondrocyte differentiation remained unknown. In this study, WNT1 protein expression was observed in lateral superficial cartilage and growth plate pre-hypertrophic chondrocytes in mice. Wnt1 mRNA expression was detected in epiphyseal cartilage from E16.5 to 3 month-old mice. Detailed histological analyses revealed that the average thickness and chondrocyte density of proximal tibial articular cartilage and growth plate were unchanged between Wnt1_Prrx^−/− and control mice. However, μCT analysis of tibial epiphyses showed that the subchondral bone mass was reduced in Wnt1_Prrx^−/− mice compared to control mice, as demonstrated by decreased bone volume, trabecular number, trabecular thickness, and increased trabecular separation in Wnt1_Prrx^−/− mice. Mechanistically, histomorphometric analyses showed that the reduced subchondral bone mass in Wnt1_Prrx^−/− mice was due to impaired bone formation and enhanced bone resorption. In vitro, exogenous Wnt1 inhibited chondrogenesis and chondrocyte hypertrophy in both cell autonomous and juxtacrine manners, while matrix mineralization and the expression of Mmp13, Mmp9 and Opn were induced in a juxtacrine manner. Taken together, mesenchymal cell-derived Wnt1 is an important regulator of subchondral bone remodeling, although it has no effect on the regulation of growth plate or articular cartilage.