LPS is a potent stimulator of bone resorption in inflammatory diseases. The mechanism by which LPS induces osteoclastogenesis was studied in cocultures of mouse osteoblasts and bone marrow cells. LPS stimulated osteoclast formation and PGE(2) production in cocultures of mouse osteoblasts and bone marrow cells, and the stimulation was completely inhibited by NS398, a cyclooxygenase-2 inhibitor. Osteoblasts, but not bone marrow cells, produced PGE(2) in response to LPS. LPS-induced osteoclast formation was also inhibited by osteoprotegerin (OPG), a decoy receptor of receptor activator of NF-kappaB ligand (RANKL), but not by anti-mouse TNFR1 Ab or IL-1 receptor antagonist. LPS induced both stimulation of RANKL mRNA expression and inhibition of OPG mRNA expression in osteoblasts. NS398 blocked LPS-induced down-regulation of OPG mRNA expression, but not LPS-induced up-regulation of RANKL mRNA expression, suggesting that down-regulation of OPG expression by PGE(2) is involved in LPS-induced osteoclast formation in the cocultures. NS398 failed to inhibit LPS-induced osteoclastogenesis in cocultures containing OPG knockout mouse-derived osteoblasts. IL-1 also stimulated PGE(2) production in osteoblasts and osteoclast formation in the cocultures, and the stimulation was inhibited by NS398. As seen with LPS, NS398 failed to inhibit IL-1-induced osteoclast formation in cocultures with OPG-deficient osteoblasts. These results suggest that IL-1 as well as LPS stimulates osteoclastogenesis through two parallel events: direct enhancement of RANKL expression and suppression of OPG expression, which is mediated by PGE(2) production.