When 1 mM ATP was added to ambient media of canine cartilage in organ culture or canine chondrocytes in monolayer culture, PPi was generated linearly over 4 hours. The appearance of PPi was related to an ectoenzyme based upon its ability to act upon extracellular substrate, to generate extracellular products, failure to detect enzyme activity in supernatant media, failure to increase activity by cell disruption, and susceptibility to digestion by extracellular trypsin. The enzyme responsible for PPi generation is nucleoside triphosphate (NTP) pyrophosphohydrolase, which acts upon a number of purine and pyrimidine nucleoside triphosphates. This enzyme may play a role in generation of extracellular PPi which participates in calcium pyrophosphate dihydrate crystal formation.