Abstract Background Fibroblast growth factor receptor 3 (FGFR3) inhibits growth-plate chondrocyte proliferation and limits bone elongation. Gain-of-function FGFR3 mutations cause dwarfism, reduced telomerase activity and shorter telomeres in growth plate chondroyctes suggesting that FGFR3 reduces proliferative capacity, inhibits telomerase, and enhances senescence. Thyroid hormone (T3) plays a role in cellular maturation of growth plate chondrocytes and a known target of T3 is FGFR3. The present study addressed whether reduced FGFR3 expression enhanced telomerase activity, mRNA expression of telomerase reverse transcriptase (TERT) and RNA component of telomerase (TR), and chondrocyte proliferation, and whether the stimulation of FGFR3 by T3 evoked the opposite response. Results Sheep growth-plate proliferative zone chondrocytes were cultured and transfected with siRNA to reduce FGFR3 expression; FGFR3 siRNA reduced chondrocyte FGFR3 mRNA and protein resulting in greater proliferation and increased TERT mRNA expression and telomerase activity (p < 0.05). Chondrocytes treated with T3 significantly enhanced FGFR3 mRNA and protein expression and reduced telomerase activity (p < 0.05); TERT and TR were not significantly reduced. The action of T3 at the growth plate may be partially mediated through the FGFR3 pathway. Conclusions The results suggest that FGFR3 inhibits chondrocyte proliferation by down-regulating TERT expression and reducing telomerase activity indicating an important role for telomerase in sustaining chondrocyte proliferative capacity during bone elongation.