We have recently shown that a carboxyl-terminal sequence of parathyroid hormone-related protein, PTHrP[107-139], is a potent direct inhibitor of osteoclastic bone resorption. We now report that this bone resorption inhibitory activity, which we have called osteostatin, is entirely contained within the highly conserved pentapeptide PTHrP[107-111]. Our results indicate that processing at residue 106 and a free amino terminus is required for full activity of the peptide. The retroinverted peptide is considerably less potent than the parent peptide. The retention of full biological activity in such a short fragment was unexpected. This data provides the basis for the development of further analogs with potential therapeutic use in disorders associated with increased osteoclastic bone resorption.