Both the WNT/β-catenin and hedgehog signaling pathways are important in the regulation of limb development, chondrocyte differentiation, and degeneration of articular cartilage in osteoarthritis (OA). It is not clear how these signaling pathways interact in interzone cell differentiation and synovial joint morphogenesis. Here, we determined that constitutive activation of hedgehog signaling specifically within interzone cells induces joint morphological changes by selectively inhibiting β-catenin-induced Fgf18 expression. Stabilization of β-catenin or treatment with FGF18 rescued hedgehog-induced phenotypes. Hedgehog signaling induced expression of a dominant negative isoform of TCF7L2 (dnTCF7L2) in interzone progeny, which may account for the selective regulation of β-catenin target genes observed. Knockdown of TCF7L2 isoforms in mouse chondrocytes rescued hedgehog signaling-induced Fgf18 downregulation, while overexpression of the human dnTCF7L2 orthologue (dnTCF4) in human chondrocytes promoted the expression of catabolic enzymes associated with OA. Similarly, expression of dnTCF4 in human chondrocytes positively correlated with the aggrecanase ADAMTS4. Consistent with our developmental findings, activation of β-catenin also attenuated hedgehog-induced or surgically induced articular cartilage degeneration in mouse models of OA. Thus, our results demonstrate that hedgehog inhibits selective β-catenin target gene expression to direct interzone progeny fates and articular cartilage development and disease. Moreover, agents that increase β-catenin activity have the potential to therapeutically attenuate articular cartilage degeneration as part of OA.
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