Proteins that are localized to the cell surface via glycosylphosphatidylinositol (gpi) anchors have been proposed to regulate cell signaling and cell adhesion events involved in tissue patterning. Conditional deletion of Piga, which encodes the catalytic subunit of an essential enzyme in the gpi-biosynthetic pathway, in the lateral plate mesoderm results in normally patterned limbs that display chondrodysplasia. Analysis of mutant and mosaic Piga cartilage revealed two independent cell autonomous defects. First, loss of Piga function interferes with signal reception by chondrocytes as evidenced by delayed maturation. Second, the proliferative chondrocytes, although present, fail to flatten and arrange into columns. We present evidence that the abnormal organization of mutant proliferative chondrocytes results from errors in cell intercalation. Collectively, our data suggest that the distinct morphological features of the proliferative chondrocytes result from a convergent extension-like process that is regulated independently of chondrocyte maturation.