Bone destruction in multiple myeloma is characterized both by markedly increased osteoclastic bone destruction and severely impaired osteoblast activity. We reported that interleukin-3 (IL-3) levels are increased in bone marrow plasma of myeloma patients compared with healthy controls and that IL-3 stimulates osteoclast formation. However, the effects of IL-3 on osteoblasts are unknown. Therefore, to determine if IL-3 inhibits osteoblast growth and differentiation, we treated primary mouse and human marrow stromal cells with IL-3 and assessed osteoblast differentiation. IL-3 inhibited basal and bone morphogenic protein-2 (BMP-2)-stimulated osteoblast formation in a dose-dependent manner without affecting cell growth. Importantly, marrow plasma from patients with high IL-3 levels inhibited osteoblast differentiation, which could be blocked by anti-IL-3. However, IL-3 did not inhibit osteoblast differentiation of osteoblastlike cell lines. In contrast, IL-3 increased the number of CD45+ hematopoietic cells in stromal-cell cultures. Depletion of the CD45+ cells abolished the inhibitory effects of IL-3 on osteoblasts, and reconstitution of the cultures with CD45+ cells restored the capacity of IL-3 to inhibit osteoblast differentiation. These data suggest that IL-3 plays a dual role in the bone destructive process in myeloma by both stimulating osteoclasts and indirectly inhibiting osteoblast formation.