Strategies for bone regeneration are undergoing a paradigm shift, moving away from the replication of end-stage bone tissue and instead aiming to recapture the initial events of fracture repair. Although this is known to resemble endochondral bone formation, chondrogenic cell types with favorable proliferative and hypertrophic differentiation properties are lacking. Recent advances in cellular reprogramming have allowed the creation of alternative cell populations with specific properties through the forced expression of transcription factors. Herein, we investigated the in vitro hypertrophic differentiation and in vivo tissue formation capacity of induced chondrogenic cells (iChon cells) obtained through direct reprogramming. In vitro hypertrophic differentiation was detected in iChon cells that contained a doxycycline-inducible expression system for Klf4, cMyc, and Sox9. Furthermore, endochondral bone formation was detected after implantation in nude mice. The bone tissue was derived entirely from host origin, whereas cartilage tissue contained cells from both host and donor. The results obtained highlight the promise of cellular reprogramming for the creation of functional skeletal cells that can be used for novel bone healing strategies.