Growth of long bones and vertebrae is maintained postnatally by a long-lasting pool of progenitor cells. Little is known about the molecular mechanisms that regulate the output and maintenance of the cells that give rise to mature cartilage. Here we demonstrate that postnatal chondrocyte-specific deletion of a transcription factor Stat3 results in severely reduced proliferation coupled with increased hypertrophy, growth plate fusion, stunting and signs of progressive dysfunction of the articular cartilage. This effect is dimorphic, with females more strongly affected than males. Chondrocyte-specific deletion of the IL-6 family cytokine receptor gp130, which activates Stat3, phenocopied Stat3-deletion; deletion of Lifr, one of many co-receptors that signals through gp130, resulted in a milder phenotype. These data define a molecular circuit that regulates chondrogenic cell maintenance and output and reveals a pivotal positive function of IL-6 family cytokines in the skeletal system with direct implications for skeletal development and regeneration.