Fibroblast growth factors (FGFs) and their receptors (FGFRs) play significant roles in vertebrate organogenesis and morphogenesis. FGFR3 is a negative regulator of chondrogenesis and multiple mutations with constitutive activity of FGFR3 result in achondroplasia, one of the most common dwarfisms in humans, but the molecular mechanism remains elusive. In this study, we found that chondrocyte-specific deletion of BMP type I receptor a (Bmpr1a) rescued the bone overgrowth phenotype observed in Fgfr3 deficient mice by reducing chondrocyte differentiation. Consistently, using in vitro chondrogenic differentiation assay system, we demonstrated that FGFR3 inhibited BMPR1a-mediated chondrogenic differentiation. Furthermore, we showed that FGFR3 hyper-activation resulted in impaired BMP signaling in chondrocytes of mouse growth plates. We also found that FGFR3 inhibited BMP-2- or constitutively activated BMPR1-induced phosphorylation of Smads through a mechanism independent of its tyrosine kinase activity. We found that FGFR3 facilitates BMPR1a to degradation through Smurf1-mediated ubiquitination pathway. We demonstrated that down-regulation of BMP signaling by BMPR1 inhibitor dorsomorphin led to the retardation of chondrogenic differentiation, which mimics the effect of FGF-2 on chondrocytes and BMP-2 treatment partially rescued the retarded growth of cultured bone rudiments from thanatophoric dysplasia type II mice. Our findings reveal that FGFR3 promotes the degradation of BMPR1a, which plays an important role in the pathogenesis of FGFR3-related skeletal dysplasia.