In the developing limb, chondrogenesis is an important prerequisite for the formation of cartilage whose template is required for bone formation. Chondrogenesis is a tightly regulated multi-step process, including mesenchymal cell recruitment/migration, prechondrogenic condensation of the mesenchymal cells, commitment to the chondrogenic lineage, and differentiation into chondrocytes. This process is controlled exquisitely by cellular interactions with the surrounding matrix and regulating factors that initiate or suppress cellular signaling pathways and transcription of specific genes in a temporal-spatial manner. Understanding the cellular and molecular mechanisms of chondrogenesis is important not only in the context of establishing basic principle of developmental biology but also in providing research direction toward preventive and/or regenerative medicine. Here, I will overview the current understanding of cellular and molecular mechanisms contributing to prechondrogenic condensation processes, the crucial steps for chondrogenesis, focusing on cell-cell and cell-matrix interactions.