Bone morphogenetic protein (BMP) signaling is required for endochondral bone formation. However, whether or not the effects of BMPs are mediated via canonical Smad pathways or through noncanonical pathways is unknown. In this study we have determined the role of receptor Smads 1, 5 and 8 in chondrogenesis. Deletion of individual Smads results in viable and fertile mice. Combined loss of Smads 1, 5 and 8, however, results in severe chondrodysplasia. Smad1/5(CKO) (cartilage-specific knockout) mutant mice are nearly identical to Smad1/5(CKO);Smad8(-/-) mutants, indicating that Smads 1 and 5 have overlapping functions and are more important than Smad8 in cartilage. The Smad1/5(CKO) phenotype is more severe than that of Smad4(CKO) mice, challenging the dogma, at least in chondrocytes, that Smad4 is required to mediate Smad signaling through BMP pathways. The chondrodysplasia in Smad1/5(CKO) mice is accompanied by imbalances in cross-talk between the BMP, FGF and Ihh/PTHrP pathways. We show that Ihh is a direct target of BMP pathways in chondrocytes, and that FGF exerts antagonistic effects on Ihh expression. Finally, we tested whether FGF exerts its antagonistic effects directly through Smad linker phosphorylation. The results support the alternative conclusion that the effects of FGFs on BMP signaling are indirect in vivo.