Skeletal stem cells regulate bone growth and homeostasis by generating diverse cell types including chondrocytes, osteoblasts and marrow stromal cells. The emerging model postulates a distinct type of skeletal stem cells closely associated with the growth plate1-4, a special cartilaginous tissue playing critical roles in bone elongation5. The resting zone maintains the growth plate by expressing parathyroid hormone-related protein (PTHrP) that interacts with Indian hedgehog (Ihh) released from the hypertrophic zone6-10, while providing a source of other chondrocytes11. However, the identity of skeletal stem cells and how they are maintained in the growth plate are unknown. Here we show that skeletal stem cells are formed among PTHrP+ chondrocytes within the resting zone of the postnatal growth plate. PTHrP+ chondrocytes expressed a panel of markers for skeletal stem/progenitor cells and uniquely possessed the properties as skeletal stem cells in cultured conditions. Cell lineage analysis revealed that PTHrP+ resting chondrocytes continued to form columnar chondrocytes long term, which underwent hypertrophy and became osteoblasts and marrow stromal cells beneath the growth plate. Transit-amplifying chondrocytes in the proliferating zone, which was concertedly maintained by a forward signal from undifferentiated cells (PTHrP) and a reverse signal from hypertrophic cells (Ihh), provided instructive cues to maintain cell fates of PTHrP+ resting chondrocytes. Our findings unravel a unique somatic stem cell type that is initially unipotent and acquires multipotency at the post-mitotic stage, underscoring the malleable nature of the skeletal cell lineage. This system provides a model in which functionally dedicated stem cells and their niche are specified postnatally and maintained throughout tissue growth by a tight feedback regulation system.