Calcium pyrophosphate (CPP) dihydrate crystals form extracellularly. Their formation requires sufficient extracellular inorganic pyrophosphate (ePPi), calcium, and pro-nucleating factors. As inorganic pyrophosphate (PPi) cannot cross cell membranes passively due to its large size, ePPi results either from hydrolysis of extracellular ATP by the enzyme ectonucleotide pyrophosphatase/phosphodiesterase 1 (also known as plasma cell membrane glycoprotein 1) or from the transcellular transport of PPi by ANKH. ePPi is hydrolyzed to phosphate (Pi) by tissue non-specific alkaline phosphatase. The level of extracellular PPi and Pi is tightly regulated by several interlinked feedback mechanisms and growth factors. The relative concentration of Pi and PPi determines whether CPP or hydroxyapatite crystal is formed, with low Pi/PPi ratio resulting in CPP crystal formation, while a high Pi/PPi ratio promotes basic calcium phosphate crystal formation. CPP crystals are deposited in the cartilage matrix (preferentially in the middle layer) or in areas of chondroid metaplasia. Hypertrophic chondrocytes and specific cartilage matrix changes (e.g. high levels of dermatan sulfate and S-100 protein) are related to CPP crystal deposition and growth. CPP crystals cause inflammation by engaging with the NALP3 inflammasome, and with other components of the innate immune system, and is marked with a prolonged neutrophilic inflitrate. The pathogenesis of resolution of CPP crystal-induced inflammation is not well understood.