To maintain homeostasis of bone, the production of osteoblasts and osteoclasts is tightly regulated. At the local level, hormones and cytokines control formation of osteoclasts from hemopoietic precursors by acting upon osteoblastic-stromal cells and in some cases also upon cells of the immune system. Osteoblasts regulate osteoclast formation by providing physical support and cytokines such as M-CSF and IL-11, which promote osteoclast differentiation. Osteoblasts are also a source of IL-18, which limits osteoclast formation. The requirement of contact between osteoblasts and hemopoietic cells for successful osteoclast formation led to a concept of a membrane-anchored stromal cell molecule that programs osteoclast differentiation. This mechanism has been highlighted by the discovery of osteoprotegerin (OPG), a soluble tumor necrosis factor (TNF) family member that inhibits osteoclast formation. The ligand for OPG is a novel transmembrane TNF receptor superfamily member, the osteoclast differentiating factor (ODF). The recognition of the osteoprotegerin/osteoprotegerin-ligand axis will lead to new insights into the control of osteoclast differentiation by interleukins.