Myeloma bone disease is caused by uncoupling of osteoclastic bone resorption and osteoblastic bone formation. Bidirectional signaling between the cell-surface ligand ephrinB2 and its receptor, EphB4, is involved in the coupling of osteoblastogenesis and osteoclastogenesis and in angiogenesis. EphrinB2 and EphB4 expression in mesenchymal stem cells (MSCs) from myeloma patients and in bone cells in myelomatous bones was lower than in healthy counterparts. Wnt3a induced up-regulation of EphB4 in patient MSCs. Myeloma cells reduced expression of these genes in MSCs, whereas in vivo myeloma cell-conditioned media reduced EphB4 expression in bone. In osteoclast precursors, EphB4-Fc induced ephrinB2 phosphorylation with subsequent inhibition of NFATc1 and differentiation. In MSCs, EphB4-Fc did not induce ephrinB2 phosphorylation, whereas ephrinB2-Fc induced EphB4 phosphorylation and osteogenic differentiation. EphB4-Fc treatment of myelomatous SCID-hu mice inhibited myeloma growth, osteoclastosis, and angiogenesis and stimulated osteoblastogenesis and bone formation, whereas ephrinB2-Fc stimulated angiogenesis, osteoblastogenesis, and bone formation but had no effect on osteoclastogenesis and myeloma growth. These chimeric proteins had similar effects on normal bone. Myeloma cells expressed low to undetectable ephrinB2 and EphB4 and did not respond to the chimeric proteins. The ephrinB2/EphB4 axis is dysregulated in MM, and its activation by EphB4-Fc inhibits myeloma growth and bone disease.