Coordinated control of gene expression in chondrocytes is intimately involved in skeletal morphogenesis. While significant progress has been made in our understanding of DNA-binding transcription factors in the differentiation of chondrocytes, it is less understood how epigenetic regulation such as histone modification and chromatin remodeling affects chondrocyte-specific genes and the process of chondrogenesis. This principal investigator has recently cloned a novel histone methyltransferase that catalyzes methylation of histone H3-lysine 9. This methyltransferase is named ESET for its ability to interact with the ets-related transcription factor ERG (a regulator of chondrocyte differentiation) and for the presence of a catalytic SET domain. Within the mammalian genome ESET is a single copy gene that gives rise to a full-length transcript and a splicing variant. Our preliminary experiments suggest that the full-length ESET is expressed throughout all stages of chondrocyte differentiation, whereas expression of the shorter ESET splice variant is transiently upregulated in proliferating chondrocytes and is implicated in activation of the Col11a2 gene. We hypothesize that the two ESET splice variants differentially interact with transcription factors and histone modification enzymes to exert their influence in chondrogenic calls. The full-length ESET functions in stable silencing of genes during chondrogenic differentiation, whereas the shorter ESET splice variant relieves the stable silencing effects of full-length ESET for expression of chondrocyte-specific genes such as Col11a2. To test this hypothesis, full-length ESET, its splice variant and their associated proteins in chondrogenic ceils will be characterized, the effects of ESET on chondrogenic differentiation of mouse embryonic stem (ES) ceils will be examined, and the regulatory mechanism of ESET splice variants on chondrocyte-specific genes such as Col11a2 will be investigated. The proposed biochemical and functional characterization of ESET histone methyltransferase in this application will provide us with new insights into the fundamental mechanisms governing chondrocyte differentiation and collagen gene expression.