This study aimed to investigate the role of protein phosphatase 5 (PP5) on bone and cartilage development using both in vivo and in vitro approaches. Six- to 8-week- old male PP5 knockout mice (KO) and their wild-type (WT) littermate controls were randomly selected for this study, and their body weights and bone (femur) lengths were measured. Micro-computed tomography scanning (Micro-CT) was performed to determine femoral bone density and micro-architecture. Mesenchymal stem cells (MSCs) isolated from bone marrow were used to examine the effects of PP5 on osteogenesis in vitro. Whole-mount Alcian blue and Alizarin red staining were used to detect cartilage formation in newborn vertebrae, limbs, and feet. Hematoxylin and eosin (H&E) staining was performed to determine growth plate thickness. Real-time PCR analysis, western blotting, and immunohistochemistry were used to detect the expression of genes and proteins in bone marrow-derived MSCs as well as in bone and cartilage tissues. The results showed PP5 KO mice exhibited significantly reduced body weight and shorter femur length compared to WT controls. The KO mice also had significantly higher volumetric bone mineral density (BMD), trabecular bone volume, and cortical thickness in the femur. The deficiency of PP5 significantly enhanced the formation of cartilage in vertebrae, limbs, and feet. In addition, KO mice possessed a wider distal femur growth plates containing significantly more chondrocytes than WT mice. Furthermore, higher expressions of several cartilage-specific genes were observed in the articular cartilage of PP5 KO mice. Immunohistochemical labeling of growth plates demonstrated that phospho-PPARγ, Runx1, and Runx2 levels were considerably higher in the KO mice. In conclusion, PP5 is a significant negative regulator on the regulation of bone and cartilage development.