The biological activity of 24R,25-dihydroxyvitamin D3 [24R,25(OH)2D3] remains controversial, but it has been suggested that it contributes to fracture healing. Cyp24a1–/– mice, synthesizing no 24R,25(OH)2D3, show suboptimal endochondral ossification during fracture repair, with smaller callus and reduced stiffness. These defects were corrected by 24R,25(OH)2D3 treatment, but not by 1,25-dihydroxyvitamin D3. Microarrays with Cyp24a1–/– callus mRNA identified FAM57B2 as a mediator of the 24R,25(OH)2D3 effect. FAM57B2 produced lactosylceramide (LacCer) upon specific binding of 24R,25(OH)2D3. Fam57b inactivation in chondrocytes (Col2-Cre Fam57bfl/fl) phenocopied the callus formation defect of Cyp24a1–/– mice. LacCer or 24R,25(OH)2D3 injections restored callus volume, stiffness, and mineralized cartilage area in Cyp24a1-null mice, but only LacCer rescued Col2-Cre Fam57bfl/fl mice. Gene expression in callus tissue suggested that the 24R,25(OH)2D3/FAM57B2 cascade affects cartilage maturation. We describe a previously unrecognized pathway influencing endochondral ossification during bone repair through LacCer production upon binding of 24R,25(OH)2D3 to FAM57B2. Our results identify potential new approaches to ameliorate fracture healing.