FGF signaling inhibits chondrocyte proliferation, a cell type-specific response that is the basis for several genetic skeletal disorders caused by activating FGFR mutations. This phenomenon requires the function of the p107 and p130 members of the Rb protein family, and p107 dephosphorylation is one of the earliest distinguishing events in FGF-induced growth arrest. To determine whether p107 dephoshorylation played a critical role in the chondrocyte response to FGF, we sought to counteract this process by overexpressing in RCS chondrocytes the cyclin D1/cdk4 kinase complex. CyclinD/cdk4-expressing RCS cells became resistant to FGF-induced p107 dephosphorylation and growth arrest, and maintained significantly high levels of cyclin E/cdk2 activity and of phosphorylated p130 at later times of FGF treatment. We explored the involvement of a phosphatase in p107 dephosphorylation. Expression of the SV40 small T-Ag, which inhibits the activity of the PP2A phosphatase, or knockdown of the expression of the PP2A catalytic subunit by RNA interference prevented p107 dephosphorylation and FGF-induced growth arrest of RCS cells. Furthermore, an association between p107 and PP2A was induced by FGF treatment. Our data show that p107 dephosphorylation is a key event in FGF-induced cell cycle arrest and indicate that in chondrocytes FGF activates the PP2A phosphatase to promote p107 dephosphorylation.