Condylar articular cartilage in mouse temporomandibular joint develops from progenitor cells near the articulating surface that proliferate, undergo chondrogenesis and mature into hypertrophic chondrocytes. However, it remains unclear how these processes are regulated, particularly postnatally. Here we focused on the apical polymorphic layer rich in progenitors and asked whether the phenotype and fate of the cells require signaling by Indian hedgehog (Ihh) previously studied in developing long bones. In condyles in newborn mice, the apical polymorphic/progenitor cell layer was ~10 cell layer-thick and expressed the articular matrix marker Tenascin-C (Tn-C), and the underlying thick cell layer expressed Tn-C as well as the chondrogenic master regulator Sox9. By 1 month, condylar cartilage had gained its full width, but became thinner along its main longitudinal axis and displayed hypertrophic chondrocytes. By 3 months, articular cartilage consisted of a 2-3 cell layer-thick zone of superficial cells and chondroprogenitors expressing both Tn-C and Sox9 and a bottom zone of chondrocytes displaying vertical matrix septa. EdU cell tracing in juvenile mice revealed that conversion of chondroprogenitors into chondrocytes and hypertrophic chondrocytes required about 48 and 72 h, respectively. Notably, EdU injection in 3 month-old mice labeled both progenitors and maturing chondrocytes by 96 h. Conditional ablation of Ihh in juvenile/early adult mice compromised chondroprogenitor organization and function and led to reduced chondroprogenitor and chondrocyte proliferation. The phenotype of mutant condyles worsened over time as indicated by apoptotic chondrocyte incidence, ectopic chondrocyte hypertrophy, chondrocyte column derangement and subchondral bone deterioration. In micromass cultures of condylar apical cells, hedgehog (Hh) treatment stimulated chondrogenesis and alkaline phosphatase (APase) activity, while treatment with HhAntag inhibited both. Our findings indicate that the chondroprogenitor layer is continuously engaged in condylar growth postnatally and its organization and functioning depend on hedgehog signaling.