The osteoclast is a hematopoietic cell derived from CFU-GM and branches from the monocyte-macrophage lineage early during the differentiation process. The marrow microenvironment appears critical for osteoclast formation due to production of RANK ligand, a recently described osteoclast differentiation factor, by marrow stromal cells in response to a variety of osteotropic factors. In addition, factors such as osteoprotegerin, a newly described inhibitor of osteoclast formation, as well as secretory products produced by the osteoclast itself and other cells in the marrow enhance or inhibit osteoclast formation. The identification of the role of oncogenes such as c-fos and pp60 c-src in osteoclast differentiation and bone resorption have provided important insights in the regulation of normal osteoclast activity. Current research is beginning to delineate the signaling pathways involved in osteoclastic bone resorption and osteoclast formation in response to cytokines and hormones. The recent development of osteoclast cell lines may make it possible for major advances to our understanding of the biology of the osteoclast to be realized in the near future.