It has been reported that Cordyceps sinensis, a traditional Chinese medicine, has various pharmacological effects. The aim of this study was to clarify the effect of water extract of Cordyceps sinensis (WECS) on osteoclast differentiation in vitro. In mouse bone marrow cells and monocyte/macrophage cell line RAW264.7, WECS dose-dependently inhibited the receptor activator of nuclear factor kappa B (NF-kappaB) ligand (RANKL)-induced osteoclast differentiation by tartrate-resistant acid phosphatase (TRAP) staining. In fact, cytotoxic effect was not observed in the RAW264.7 cells treated with WECS. Moreover, the mRNA expression of osteoclast related genes (calcitonin receptor, cathepsin K, matrix metalloprotease 9 and nuclear factor of activated T cells c1) was also inhibited by WECS. Investigation of inhibitory mechanism by using electrophoretic mobility shift assay (EMSA) and Western blot analysis revealed that WECS inhibited the activation of NF-kappaB through the prevention of IkappaBalpha phosphorylation. In conclusion, the present results demonstrate for the first time that WECS is a potent inhibitor of the RANKL-induced osteoclast differentiation through a mechanism involving the NF-kappaB pathway.