Pigmented villonodular synovitis (PVNS) and the histologically related lesion giant cell tumor of tendon sheath (GCTTS) are idiopathic, proliferative lesions that can induce osteolysis and formation of bone cysts. These lesions contain two predominant cell types: mononuclear polyhedral cells and multinucleated cells (MNCs). Previous studies demonstrated that the mononuclear cells exhibit phenotypic features consistent with derivation from a monocyte/macrophage lineage. The cell lineage of the MNCs and their relationship to osteoclasts are not known. To characterize the MNCs in these lesions and to establish the relationship of these MNCs to osteoclasts, histological sections from six cases of PVNS and two cases of GCTTS were studied. Mononuclear cells expressed CD14 and HLA-DR, in keeping with their relationship to cells of the monocyte/macrophage lineage. Characterization of the MNCs revealed features associated with an osteoclast phenotype. Seven of the eight specimens contained MNCs that were intensely tartrate-resistant acid phosphatase positive; approximately 5% of the mononuclear cells were tartrate-resistant acid phosphatase positive, and these tended to surround MNCs. MNCs in both lesions reacted strongly with the 23C6 monoclonal antibody that recognizes the alpha V beta 3 integrin (the vitronectin receptor), as did several mononuclear cells surrounding the MNCs. Most MNCs did not express CD14 or HLA-DR. Expression of receptors for calcitonin, a marker for osteoclasts, was detected on MNCs after incubation of sections with 125I-labeled salmon calcitonin and emulsion autoradiography. MNCs in four of six PVNS and two of two GCTTS samples demonstrated specific calcitonin binding. Expression of mRNA for calcitonin receptor was confirmed in all cases by reverse transcriptase polymerase chain reaction. These results demonstrate that MNCs in PVNS and GCTTS express phenotypic features of authentic osteoclasts and suggest that osteoclast-like multinucleated cells can arise in synovial soft tissues remote from bone.