The osteoclast (OCL) is derived from the cells in monocyte‐macrophage lineage. The earliest identifiable OCL precursor is the granulocyte‐macrophage colony‐forming unit (CFU‐GM), which gives rise to granulocytes, monocytes, and OCL. CFU‐GM–derived cells then differentiate to committed OCL precursors, which are post‐mitotic cells, and fuse to form multinucleated OCL. A variety of factors both positively and negatively regulate OCL formation and activity. These include growth factors, such as macrophage colony‐simulating factor, which simulates the proliferation and prevents apoptosis of early OCL precursors, and RANK ligand (RANKL), which is the primary mediator of OCL formation. Most factors that induce OCL differentiation, such as PTHrP, IL‐11, and prostaglandins, do so by inducing expression of RANKL on the surface of immature osteoblasts. Osteoprotegerin is a decoy receptor that blocks RANKL activity. In addition, OCL produce autocrine‐paracrine factors that regulate OCL formation, such as IL‐6, which is produced at high levels by OCL in Paget's disease and increases OCL formation. We screened human and murine OCL cDNA libraries to identify autocrine‐paracrine factors that regulate OCL activity. We identified annexin‐II, MIP‐1α, ADAM8, eosinophil chemotactic factor, and OCL inhibitor factors 1 and 2 as factors involved in OCL formation. Most recently, we have identified the receptor for ADAM8, α₉β₁ integrin, which appears to be critical for normal OCL activity. OCL differentiation is controlled by exogenous hormones and cytokines as well as autocrine‐paracrine factors that positively or negatively regulate OCL proliferation and differentiation.