Using an expression cloning approach, we identified and cloned a novel intracellular protein produced by osteoclasts that indirectly induces osteoclast formation and bone resorption, termed OSF. Conditioned media from 293 cells transiently transfected with the 0.9 kb OSF cDNA clone stimulated osteoclast-like cell formation in both human and murine marrow cultures in the presence or absence 10(-9) M 1,25-dihydroxyvitamin D3. In addition, conditioned media from 293 cells transfected with the OSF cDNA clone enhanced the stimulatory effects of 1,25-(OH)2D3 on bone resorption in the fetal rat long bone assay. In situ hybridization studies using antisense oligomers showed expression of OSF mRNA in highly purified osteoclast-like cells from human giant cell tumors of the bone. Northern blot analysis demonstrated ubiquitous expression of a 1.3 kb mRNA that encodes OSF in multiple human tissues. Sequence analysis showed the OSF cDNA encoded a 28 kD peptide that contains a c-Src homology 3 domain (SH3) and ankyrin repeats, suggesting that it was not a secreted protein, but that it was potentially involved in cell signaling. Consistent with these data, immunoblot analysis using rabbit antisera against recombinant OSF demonstrated OSF expression in cell lysates but not in the culture media. Furthermore, recombinant OSF had a high affinity for c-Src, an important regulator of osteoclast activity. Taken together, these data suggest that OSF is a novel intracellular protein that indirectly enhances osteoclast formation and osteoclastic bone resorption through the cellular signal transduction cascade, possibly through its interactions with c-Src or other Src-related proteins.