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BBF2H7 (box B-binding factor 2 human homolog on chromosome 7) is a basic leucine zipper transmembrane transcription factor that belongs to the cyclic AMP-responsive element-binding protein (CREB)/activating transcription factor (ATF) family. This novel endoplasmic reticulum (ER) stress transducer is localized in the ER and is cleaved in its transmembrane region in response to ER stress. BBF2H7 has been shown to be expressed in proliferating chondrocytes in cartilage during the development of long bones. The target of BBF2H7 is Sec23a, one of the coat protein complex II components. Bbf2h7-deficient (Bbf2h7(-/-)) mice exhibit severe chondrodysplasia, with expansion of the rough ER in proliferating chondrocytes caused by impaired secretion of extracellular matrix (ECM) proteins. We observed a decrease in the number of proliferating chondrocytes in the cartilage of Bbf2h7(-/-) mice. TUNEL staining of the cartilage showed that apoptosis was promoted in Bbf2h7(-/-) chondrocytes. Atf5 (activating transcription factor 5), another member of the CREB/ATF family and an antiapoptotic factor, was also found to be a target of BBF2H7 in chondrocytes. ATF5 activated the transcription of Mcl1 (myeloid cell leukemia sequence 1), which belongs to the antiapoptotic B-cell leukemia/lymphoma 2 family, to suppress apoptosis. Finally, we found that the BBF2H7-ATF5-MCL1 pathway specifically suppressed ER stress-induced apoptosis in chondrocytes. Taken together, our findings indicate that BBF2H7 is activated in response to ER stress caused by synthesis of abundant ECM proteins and plays crucial roles as a bifunctional regulator to accelerate ECM protein secretion and suppress ER stress-induced apoptosis by activating the ATF5-MCL1 pathway during chondrogenesis.