During endochondral ossification, the differentiation of proliferating into hypertrophic chondrocytes is a key step determining the pace of bone formation and the future length of the skeletal elements. A variety of transcription factors are expressed at the onset of hypertrophy coordinating the expression of different signaling molecules like Bmps, Ihh and Wnt proteins. In this study, we characterized the murine Wnt5a promoter and provide evidence that two alternative Wnt5a transcripts, Ts1 and Ts2, are differentially expressed in the developing skeletal elements. Ts2 expression decreases while Ts1 expression increases during chondrocyte differentiation. The transcription factor Trps1 and the activator form of Gli3 (Gli3A), which is a mediator of Hedgehog signaling, activate Wnt5a expression. In Chromatin Immunoprecipitation and reporter gene assays, we identified two upstream regulatory sequences (URS) in the Wnt5a promoter mediating either activating or repressive functions. The activating URS1 is bound by Trps1 and Gli3A in vitro and in vivo to upregulate Wnt5a expression. Loss of both transcription factors decreases endogenous Wnt5a mRNA and protein levels during chondrocyte differentiation, thereby identifying Wnt5a as a target gene of Trps1 and Gli3A in chondrocytes.