It is increasingly recognized that changes in cytokine activity are involved in the pathophysiology of postmenopausal bone loss in many ways. Estrogen may affect skeletal cytokine activity by diverse mechanisms such as direct interference with cytokine gene transcription, regulation of major signaling molecules, changes in lymphocyte function, and central effects on the hypothalamic-pituitary-adrenal axis. This article summarizes our current knowledge of these interactions and discusses the possible implications with respect to the prevention and treatment of postmenopausal osteoporosis.