Site-1 protease (S1P) is a proprotein convertase with essential functions in lipid homeostasis and unfolded protein response pathways. We previously studied a mouse model of cartilage-specific knock-out of S1P in chondroprogenitor cells. These mice exhibited a defective cartilage matrix devoid of type II collagen protein (Col II) and displayed chondrodysplasia with no endochondral bone formation even though the molecular program for endochondral bone development appeared intact. To gain insights into S1P function, we generated and studied a mouse model in which S1P is ablated in postnatal chondrocytes. Postnatal ablation of S1P results in chondrodysplasia. However, unlike early embryonic ablations, the growth plates of these mice exhibit a lack of Ihh, PTHrP-R, and Col10 expression indicating a loss of chondrocyte hypertrophic differentiation and thus disruption of the molecular program required for endochondral bone development. S1P ablation results in rapid growth plate disruption due to intracellular Col II entrapment concomitant with loss of chondrocyte hypertrophy suggesting that these two processes are related. Entrapment of Col II in the chondrocytes of the prospective secondary ossification center precludes its development. Trabecular bone formation is dramatically diminished in the primary spongiosa and is eventually lost. The primary growth plate is eradicated by apoptosis but is gradually replaced by a fully functional new growth plate from progenitor stem cells capable of supporting new bone growth. Our study thus demonstrates that S1P has fundamental roles in the preservation of postnatal growth plate through chondrocyte differentiation and Col II deposition and functions to couple growth plate maturation to trabecular bone development in growing mice.