O steopetrosis is an inherited disorder characterized by bone sclerosis due to reduced bone resorption. Here we report that human osteopetrotic osteoblast-like (Ob) cells express a defective phenotype in primary cultures in vitro, and that bone marrow transplant (BMT) corrects osteoblast function. DNA analysis at polymorphic short-tandem repeat loci from donor, recipient, and primary Ob-like cells pre-BMT and 2 yr post-BMT revealed that Ob were still of recipient origin post-BMT. Osteopetrotic Ob-like cells obtained pre-BMT showed normal and abnormal 1,25(OH)2D3-induced alkaline phosphatase (ALPase) and osteocalcin production, respectively, and failed to produce macrophage colony-stimulating factor (M-CSF) in response to IL-1a and TNF-alpha. These parameters were all normalized in primary Ob-like cells prepared 2 yr post-BMT. X-linked clonality analysis at the human androgen receptor (HUMARA) locus revealed that osteoblasts showed a polyclonal and an oligoclonal derivation pre- and post-BMT respectively, indicating that a limited number of progenitor reconstituted this population. Because osteoblasts were still of recipient origin post-BMT, this suggests that functional osteoclasts, due to the replacement of hematopoeitic cells, provided a local microenvironment in vivo triggering the differentiation and/or recruitment of a limited number of functional osteoblasts.