Osteoclasts, which are present only in bone, are multinucleated giant cells with the capacity to resorb mineralized tissues. These osteoclasts are derived from hemopoietic progenitors of the monocyte-macrophage lineage. Osteoblasts or bone marrow-derived stromal cells are involved in osteoclastogenesis through a mechanism involving cell-to-cell contact with osteoclast progenitors. Experiments on the osteopetrotic op/op mouse model have established that a product of osteoblasts, macrophage colony-stimulating factor (M-CSF), regulates differentiation of osteoclast progenitors into osteoclasts. Recent discovery of osteoclast differentiation factor (ODF)/receptor activator of NF-kappa B ligand (RANKL) allowed elucidation of the precise mechanism by which osteoblasts regulate osteoclastic bone resorption. Treatment of osteoblasts with bone-resorbing factors up-regulated expression of RANKL mRNA. In contrast, TNF alpha stimulates osteoclast differentiation in the presence of M-CSF through a mechanism independent of the RANKL system. IL-1 also directly acts on mature osteoclasts as a potentiator of osteoclast activation. In addition, TGF-beta super family members, such as bone morphogenetic proteins (BMPs) strikingly enhanced osteoclast differentiation from their progenitors and survival of mature osteoclasts induced by RANKL. These results suggest that BMP-mediated signals cross-communicate with RANKL-mediated ones in inducing osteoclast differentiation and function.