What developmental mechanisms underlie the diversification of skeletal proportions in vertebrates? In tetrapods, variation in long-bone length underlies a great diversity of limb morphologies, and this primarily results from modulation in the degree of cell enlargement at the hypertrophic zone of growth plates. We explore the developmental basis of skull morphology evolution in two closely related species of cichlid fishes from Lake Malawi: Copadichromis azureus (CA) and Dimidiochromis compressiceps (DC). Our results demonstrate that changes in endochondral growth zone activity underlie major morphological differences that have evolved between CA and DC, yet the cellular mechanisms driving these changes are unlike those reported for tetrapod limb growth plates. Cells proliferate and deposit extra-cellular matrix in cichlid growth zones, yet surprisingly chondrocytes shrink as they mature through the hypertrophic zone in both species. Instead, differences in cell number in proliferating zones correlate with growth velocity, and we find that differences in proliferative zone size arise during embryonic development, before the appearance of distinct skeletal morphologies. Lastly, we find that one large-effect QTL mediates the difference in proliferative zone size between DC and CA.