Both clinical and in vitro evidence points to the involvement of the melanocortin peptide, ACTH hormone (ACTH), in the terminal differentiation of chondrocytes. Terminal differentiation along the endochondral pathway is responsible for linear growth but also plays a role in osteoarthritic cartilage degeneration. Chondrocyte terminal differentiation is associated with an incremental increase in chondrocyte basal intracellular free calcium ([Ca²⁺]_i) and ACTH agonism of melanocortin receptors is known to mobilize [Ca²⁺]_i. Using differentiated resting chondrocytes (RC) highly expressing type II collagen (COLL II) and aggrecan (AGR) we examined the influence of both ACTH and dexamethasone treatment on matrix gene transcription and [Ca²⁺]_i. Resting chondrocytes treated concurrently with dexamethasone and ACTH expressed matrix gene transcripts in a pattern consistent to that of rapid terminal differentiation. Using the fluorescent Ca²⁺ indicator, fura-2, we determined that ACTH evokes transient increases in [Ca²⁺]_i and elevates basal Ca²⁺ levels in RC. The transient increases were initiated intracellularly and were abrogated by the phospholipase-C (PLC) specific inhibitor, U73122, and partly attenuated by IP₃ receptor inhibition via 10 mM caffeine. The initial intracellular release also resulted in store-operated calcium entry (SOCE) presumably through store-operated channels (SOC). Dexamethasone priming increased both the initial ACTH-evoked [Ca²⁺]_i release and the subsequent SOCE. These data demonstrate a role for ACTH and glucocorticoid in the regulation of chondrocyte terminal differentiation. Because ACTH actions are mediated through known G protein-coupled receptors, the melanocortin receptors, these data may provide a new therapeutic target in the treatment of growth deficiencies and cartilage degeneration.