In osteoarthritis (OA), low-grade joint inflammation promotes altered chondrocyte differentiation and cartilage catabolism. S100/calgranulins share conserved calcium-binding EF-hand domains, associate noncovalently as homodimers and heterodimers, and are secreted and bind receptor for advanced glycation end products (RAGE). Chondrocyte RAGE expression and S100A11 release are stimulated by IL-1beta in vitro and increase in OA cartilage in situ. Exogenous S100A11 stimulates chondrocyte hypertrophic differentiation. Moreover, S100A11 is covalently cross-linked by transamidation catalyzed by transglutaminase 2 (TG2), itself an inflammation-regulated and redox stress-inducible mediator of chondrocyte hypertrophic differentiation. In this study, we researched mouse femoral head articular cartilage explants and knee chondrocytes, and a soluble recombinant double point mutant (K3R/Q102N) of S100A11 TG2 transamidation substrate sites. Both TG2 and RAGE knockout cartilage explants retained IL-1beta responsiveness. The K3R/Q102N mutant of S100A11 retained the capacity to bind to RAGE and chondrocytes but lost the capacity to signal via the p38 MAPK pathway or induce chondrocyte hypertrophy and glycosaminoglycans release. S100A11 failed to induce hypertrophy, glycosaminoglycan release, and appearance of the aggrecanase neoepitope NITEGE in both RAGE and TG2 knockout cartilages. We conclude that transamidation by TG2 transforms S100A11 into a covalently bonded homodimer that acquires the capacity to signal through the p38 MAPK pathway, accelerate chondrocyte hypertrophy and matrix catabolism, and thereby couple inflammation with chondrocyte activation to potentially promote OA progression.