Mutations in the RMRP-gene, encoding the lncRNA component of the RNase MRP complex, are the origin of cartilage-hair hypoplasia. Cartilage-hair hypoplasia is associated with severe dwarfism caused by impaired skeletal development. However, it is not clear why mutations in RMRP RNA lead to skeletal dysplasia. Since chondrogenic differentiation of the growth plate is required for development of long bones, we hypothesized that RMRP RNA plays a pivotal role in chondrogenic differentiation. Expression of Rmrp RNA and RNase MRP protein subunits was detected in the murine growth plate and during the course of chondrogenic differentiation of ATDC5 cultures, where Rmrp RNA expression was found to be correlated with chondrocyte hypertrophy. Genetic interference with Rmrp RNA expression in ATDC5 cultures caused a deregulation of chondrogenic differentiation, with a prominent impact on hypertrophy and changes in pre-rRNA processing and rRNA levels. Promoter reporter studies showed that Rmrp RNA expression responds to chondrogenic morphogens. Chondrogenic trans-differentiation of cartilage-hair hypoplasia fibroblasts was impaired with a pronounced impact on hypertrophic differentiation. Together, our data show that RMRP RNA expression is regulated during different stages of chondrogenic differentiation and indicate that RMRP RNA may play a pivotal role in chondrocyte hypertrophy, with potential consequences for CHH pathobiology.