The effects of cystatin C and other cysteine proteinase inhibitors on osteoclast formation and differentiation have been investigated. Cystatin C decreased osteoclast formation stimulated by parathyroid hormone (PTH), 1,25(OH)2-vitamin D3 or interleukin-6 (IL-6) (in the presence of its soluble receptor) as assessed by the number of tartrate-resistant acid phosphatase (TRAP+) multinucleated cells in mouse bone marrow cultures. The inhibitory effect was associated with decreased mRNA expression for the calcitonin receptor as well as decreased number of specific binding sites for 125I-calcitonin, and without any effect on the mRNA expression of receptor activator of nuclear factor kappaB (NF-kappaB) ligand (RANKL). Similarly, the cysteine proteinase inhibitors leupeptin, E-64 and benzyloxycarbonyl-Phe-Ala-diazomethane (Z-FA-CHN2) decreased PTH-stimulated formation of TRAP+ multinucleated cells and binding of 125I-calcitonin. A peptidyl derivative synthesized to mimic part of the proteinase-binding site of cystatin C (benzyloxycarbonyl-Arg-Leu-Val-Gly-diazomethane, or Z-RLVG-CHN2) also decreased PTH-stimulated osteoclast formation. In a 9-day culture, addition of cystatin C during the last 5 days was sufficient to cause substantial inhibition of osteoclast formation. Cystatin C-induced decrease of osteoclast formation was associated with enhanced number of F4/80-positive macrophages and increased mRNA expression of the macrophage receptor c-fms in the bone marrow culture. Osteoclast formation in mouse bone marrow cultures as well as in mouse spleen cell cultures, stimulated by macrophage colony-stimulating factor (M-CSF) and RANKL was also decreased by different cysteine proteinase inhibitors. In addition, cystatin C inhibited M-CSF/RANKL induction of calcitonin receptor mRNA in spleen cell cultures. The inhibitory effect by cystatin C in spleen cells was associated with decreased mRNA expression of RANK and the transcription factor NFAT2. It is concluded that cysteine proteinase inhibitors decrease formation of osteoclasts by interfering at a late stage of pre-osteoclast differentiation.