Fibroblast growth factor 18 (FGF18) has been shown to regulate chondrocyte proliferation and differentiation by signaling through FGF receptor 3 (FGFR3) and to regulate osteogenesis by signaling through other FGFRs. Fgf18^−/− mice have an apparent delay in skeletal mineralization that is not seen in Fgfr3^−/− mice. However, this delay in mineralization could not be simply explained by FGF18 signaling to osteoblasts. Here we show that delayed mineralization in Fgf18^−/− mice was closely associated with delayed initiation of chondrocyte hypertrophy, decreased proliferation at early stages of chondrogenesis, delayed skeletal vascularization and delayed osteoclast and osteoblast recruitment to the growth plate. We further show that FGF18 is necessary for Vegf expression in hypertrophic chondrocytes and the perichondrium and is sufficient to induce Vegf expression in skeletal explants. These findings support a model in which FGF18 regulates skeletal vascularization and subsequent recruitment of osteoblasts/osteoclasts through regulation of early stages of chondrogenesis and VEGF expression. FGF18 thus coordinates neovascularization of the growth plate with chondrocyte and osteoblast growth and differentiation.