Activating germline fibroblast growth factor receptor 3 (FGFR3) mutations cause achondroplasia (ACH), the most common form of human dwarfism and a spectrum of skeletal dysplasias. FGFR3 is a tyrosine kinase receptor and constitutive FGFR3 activation impairs endochondral ossification and triggers severe disorganization of the cartilage with shortening of long bones. To decipher the role of FGFR3 in endochondral ossification, we analyzed the impact of a novel tyrosine kinase inhibitor (TKI), A31, on both human and mouse mutant FGFR3-expressing cells and on the skeleton of Fgfr3^Y367C/+ dwarf mice. We found that A31 inhibited constitutive FGFR3 phosphorylation and restored the size of embryonic dwarf femurs using an ex vivo culture system. The increase in length of the treated mutant femurs was 2.6 times more than for the wild-type. Premature cell cycle exit and defective chondrocyte differentiation were observed in the Fgfr3^Y367C/+ growth plate. A31 restored normal expression of cell cycle regulators (proliferating cell nuclear antigen, KI67, cyclin D1 and p57) and allowed pre-hypertrophic chondrocytes to properly differentiate into hypertrophic chondocytes. Our data reveal a specific role for FGFR3 in the cell cycle and chondrocyte differentiation and support the development of TKIs for the treatment of FGFR3-related chondrodysplasias.