We have investigated the early cellular events that take place during the change in lineage commitment from hypertrophic chondrocytes to osteoblast-like cells. We have induced this osteogenic differentiation by cutting through the hypertrophic cartilage of embryonic chick femurs and culturing the explants. Immunocytochemical characterization, [3H]thymidine pulse-chase labeling, in situ nick translation or end labeling of DNA breaks were combined with ultrastructural studies to characterize the changing pattern of differentiation. The first responses to the cutting, seen after 2 d, were upregulation of alkaline phosphatase activity, synthesis of type I collagen and single-stranded DNA breaks, probably indicating a metastable state. Associated with the change from chondrogenic to osteogenic commitment was an asymmetric cell division with diverging fates of the two daughter cells, where one daughter cell remained viable and the other one died. The available evidence suggests that the viable daughter cell then divided and generated osteogenic cells, while the other daughter cell died by apoptosis. The results suggest a new concept of how changes in lineage commitment of differentiated cells may occur. The concepts also reconcile previously opposing views of the fate of the hypertrophic chondrocyte.