We reported that interleukin (IL) 6 alone cannot induce osteoclast formation in cocultures of mouse bone marrow and osteoblastic cells, but soluble IL-6 receptor (IL-6R) strikingly triggered osteoclast formation induced by IL-6. In this study, we examined the mechanism of osteoclast formation by IL-6 and related cytokines through the interaction between osteoblastic cells and osteoclast progenitors. When dexamethasone was added to the cocultures, IL-6 could stimulate osteoclast formation without the help of soluble IL-6R. Osteoblastic cells expressed a very low level of IL-6R mRNA, whereas fresh mouse spleen and bone marrow cells, both of which are considered to be osteoclast progenitors, constitutively expressed relatively high levels of IL-6R mRNA. Treatment of osteoblastic cells with dexamethasone induced a marked increase in the expression of IL-6R mRNA. By immunoblotting with antiphosphotyrosine antibody, IL-6 did not tyrosine-phosphorylate a protein with a molecular mass of 130 kD in osteoblastic cells but did so in dexamethasone-pretreated osteoblastic cells. Osteoblastic cells from transgenic mice constitutively expressing human IL-6R could support osteoclast development in the presence of human IL-6 alone in cocultures with normal spleen cells. In contrast, osteoclast progenitors in spleen cells from transgenic mice overexpressing human IL-6R were not able to differentiate into osteoclasts in response to IL-6 in cocultures with normal osteoblastic cells. These results clearly indicate that the ability of IL-6 to induce osteoclast differentiation depends on signal transduction mediated by IL-6R expressed on osteoblastic cells but not on osteoclast progenitors.