Histone deacetylase (HDAC) inhibitors are efficacious epigenetic-based therapies for some cancers and neurological disorders; however, each of these drugs inhibits multiple HDACs and has detrimental effects on the skeleton. To better understand how HDAC inhibitors affect endochondral bone formation, we conditionally deleted one of their targets, Hdac3, pre- and postnatally in type II collagen a1 (Col2a1)-expressing chondrocytes. Embryonic deletion was lethal, but postnatal deletion of Hdac3 delayed secondary ossification center formation, altered maturation of growth plate chondrocytes, and increased osteoclast activity in the primary spongiosa. HDAC3-deficient chondrocytes exhibited increased expression of cytokine and matrix-degrading genes (Il-6, Mmp3, Mmp13, and Saa3) and a reduced abundance of genes related to extracellular matrix production, bone development, and ossification (Acan, Col2a1, Ihh, and Col10a1). Histone acetylation increased at and near genes that had increased expression. The acetylation and activation of nuclear factor κB (NF-κB) were also increased in HDAC3-deficient chondrocytes. Increased cytokine signaling promoted autocrine activation of Janus kinase (JAK)-signal transducer and activator of transcription (STAT) and NF-κB pathways to suppress chondrocyte maturation, as well as paracrine activation of osteoclasts and bone resorption. Blockade of interleukin-6 (IL-6)-JAK-STAT signaling, NF-κB signaling, and bromodomain extraterminal proteins, which recognize acetylated lysines and promote transcriptional elongation, significantly reduced Il-6 and Mmp13 expression in HDAC3-deficient chondrocytes and secondary activation in osteoclasts. The JAK inhibitor ruxolitinib also reduced osteoclast activity in Hdac3 conditional knockout mice. Thus, HDAC3 controls the temporal and spatial expression of tissue-remodeling genes and inflammatory responses in chondrocytes to ensure proper endochondral ossification during development.