Hypertrophic chondrocytes have important roles in promoting invasion of cartilage by blood vessels and its replacement with bone. However, it is unclear whether blood vessels exert reciprocal positive influences on chondrocyte maturation and function. Therefore, we implanted beads containing the antiangiogenic molecule squalamine around humeral anlagen in chick embryo wing buds and monitored the effects over time. Fluorescence microscopy showed that the drug diffused from the beads and accumulated in humeral perichondrial tissues, indicating that these tissues were the predominant targets of drug action. Diaphyseal chondrocyte maturation was indeed delayed in squalamine‐treated humeri, as indicated by reduced cell hypertrophy and expression of type X collagen, transferrin, and Indian hedgehog (Ihh). Although reduced in amount, Ihh maintained a striking distribution in treated and control humeri, being associated with diaphyseal chondrocytes as well as inner perichondrial layer. These decreases were accompanied by lack of cartilage invasion and tartrate‐resistant acid phosphatase‐positive (TRAP⁺) cells and a significant longitudinal growth retardation. Recovery occurred at later developmental times, when in fact expression in treated humeri of markers such as matrix metalloproteinase 9 (MMP‐9) and connective tissue growth factor (CTGF) appeared to exceed that in controls. Treating primary cultures of hypertrophic chondrocytes and osteoblasts with squalamine revealed no obvious changes in cell phenotype. These data provide evidence that perichondrial tissues and blood vessels in particular influence chondrocyte maturation in a positive manner and may cooperate with hypertrophic chondrocytes in dictating the normal pace and location of the transition from cartilage to bone.