The concept that adenosine triphosphate (ATP) can act as an extracellular signaling molecule via interactions with specific purinergic receptors to mediate a wide variety of processes as diverse as neurotransmission (Edwards et al., 1992), inflammation (Perregaux et al., 1994), apoptosis (Chow et al., 1997), and bone remodelling (Jones et al., 1997; Morrison et al., 1998) is now widely accepted. Since the early work of Burnstock (Burnstock, 1972), the number of characterized P2 receptors responsive to extracellular nucleotides has increased dramatically. It is now known that both osteoblasts and osteoclasts express multiple P2 receptor subtypes, and the increasing number of nucleotide-induced effects reported to occur in bone serves to highlight the importance of these receptors in the bone microenvironment and the bone remodeling processes. In this article we will review work from our laboratory, and others, that has established nucleotides and P2 receptors as important signaling molecules in bone. In particular, we will focus on the expression of P2 receptors by osteoclasts and, more specifically, the P2X7 receptor and its paradoxical role in osteoclast function.