Osteoclasts, the multinucleated giant cells that resorb bone, develop from hematopoietic cells of the monocyte/ macrophage lineage. Osteoblasts, as well as bone marrow stromal cells, support osteoclast development through a mechanism of cell-to-cell interaction with osteoclast progenitors. We recently purified and molecularly cloned osteoclastogenesis inhibitory factor (OCIF), which was identical to osteoprotegerin (OPG). OPG/OCIF, a secreted member of the tumor necrosis factor (TNF) receptor family, inhibited differentiation and activation of osteoclasts. A single class of high-affinity binding sites for OPG/OCIF appeared on a mouse bone marrow stromal cell line, ST2, in response to 1alpha,25-dihydroxyvitamin D3 [1,25(OH)2D3] and dexamethasone (Dex). When the binding sites were occupied by OPG/OCIF, ST2 cells failed to support the osteoclast formation from spleen cells. To identify an OPG/OCIF ligand, we screened a cDNA expression library of ST2 cells treated with 1,25(OH)2D3 and Dex using OPG/OCIF as a probe. The cloned molecule was found to be a member of the membrane-associated TNF ligand family, and it induced osteoclast formation from mouse and human osteoclast progenitors in the presence of macrophage colony-stimulating factor (M-CSF) in vitro. Expression of its gene in osteoblasts/stromal cells was up-regulated by osteotropic factors, such as 1,25(OH)2D3, prostaglandin E2 (P(GE2), parathyroid hormone (PTH), and interleukin (IL)-11. A polyclonal antibody against this protein, as well as OPG/OCIF, negated not only the osteoclastogenesis induced by the protein, but also bone resorption elicited by various osteotropic factors in a fetal mouse long bone culture system. These findings led us to conclude that the protein is osteoclast differentiation factor (ODF), a long sought-after ligand that mediates an essential signal to osteoclast progenitors for their differentiation into active osteoclasts. Recent analyses of ODF receptor demonstrated that RANK, a member of the TNF receptor family, is the signaling receptor for ODF in osteoclastogenesis, and that OPG/OCIF acts as a decoy receptor for ODF to compete against RANK. The discovery of ODF, OPG/OCIF, and RANK opens a new era in the investigation of the regulation of osteoclast differentiation and function.