Osteoclasts are multinucleated cells of monocyte/macrophage origin that degrade bone matrix. The differentiation of osteoclasts is dependent on a tumor necrosis factor (TNF) family cytokine, receptor activator of nuclear factor (NF)-kappaB ligand (RANKL), as well as macrophage colony-stimulating factor (M-CSF). Congenital lack of osteoclasts causes osteopetrosis, investigation of which has provided insights into the essential molecules for osteoclastogenesis, including TNF receptor-associated factor (TRAF) 6, NF-kappaB and c-Fos. In addition, genome-wide screening techniques have shed light on an additional set of gene products such as nuclear factor of activated T cells (NFAT) c1. Here we summarize the efforts to understand the sequential molecular events induced by RANKL during osteoclast differentiation. RANKL binds to its receptor RANK, which recruits adaptor molecules such as TRAF6. TRAF6 activates NF-kappaB, which is important for the initial induction of NFATc1. NFATc1 is activated by calcium signaling and binds to its own promoter, thus switching on an autoregulatory loop. An activator protein (AP)-1 complex containing c-Fos is required for the autoamplification of NFATc1, enabling the robust induction of NFATc1. Finally, NFATc1 cooperates with other transcriptional partners to activate osteoclast-specific genes. NFATc1 autoregulation is controlled by an epigenetic mechanism, which has profound implications for an understanding of the general mechanism of irreversible cell fate determination. From the clinical point of view, RANKL signaling pathway has promise as a strategy for suppressing the excessive osteoclast formation characteristic of a variety of bone diseases.