We investigated the effect of glucocorticoid on the generation of osteoclasts. In mouse bone marrow culture systems, dexamethasone, a synthetic glucocorticoid analog, enhanced osteoclast-like cell formation induced by 1,25-dihydroxyvitamin D3 [1,25-(OH)2D3] in a dose-dependent manner. Conversely, dexamethasone inhibited the endogenous production of granulocyte-macrophage colony-stimulating factor (GM-CSF) in bone marrow cultures. GM-CSF, when added exogenously, suppressed not only the osteoclast-like cell formation induced by 1,25-(OH)2D3, but also the stimulatory effect of dexamethasone, and addition of anti-GM-CSF neutralizing antibody to the cultures significantly increased the osteoclast-like cell formation induced by 1,25-(OH)2D3. These observations suggest that dexamethasone directly affects bone marrow cells and enhances osteoclast generation by inhibiting the endogenous production of GM-CSF, which may function as a negative regulator of osteoclast formation.