Paired box gene 1 (Pax1) indirectly promotes the early stages of chondrogenic differentiation through induction and transactivation of Nk3 homeobox 2 (Nkx3.2), a transcriptional repressor. Later in chondrogenic differentiation, Nkx3.2 blocks chondrocyte hypertrophy by repressing Runt-related transcription factor 2 (Runx2). Here we report the inhibitory action of Pax1 on chondrocyte maturation, independently of Nkx3.2. Upon cartilage formation, Pax1 expression in the ventral sclerotome was gradually decreased except for the perichondrial region of the vertebral bodies and the intervertebral region, both of which express SRY-box containing gene 9 (Sox9). Forced expression of Pax1 in the chick forelimb resulted in the formation of shortened skeletal elements with a significant reduction of proteoglycans (PGs) accumulation in cartilage as well as a lack of the cortical bone formation and vascular invasion into the primary ossification center. Pax1-misexpressing chondrocytes exhibited aberrant cell morphology with a marked downregulation of Aggrecan (Agc1). Pax1-misexpressing cultured chondrocytes failed to accumulate cartilaginous PGs and became fibroblastic, in association with downregulation of the expression of Sox9, Nkx3.2, Indian hedgehog (Ihh), type II collagen (Col2a1), Chondromodulin-1 (Chm1), and Agc1. Accumulation of cartilaginous PGs in chondrocytes was also reduced by forced expression of Pax1 and Sox9. Thus, chondrocyte maturation driven by Sox9 is antagonized by Pax1 that is downregulated during chondrogenic differentiation.