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I L-17 is a newly discovered T cell–derived cytokine whose role in osteoclast development has not been fully elucidated. Treatment of cocultures of mouse hemopoietic cells and primary osteoblasts with recombinant human IL-17 induced the formation of multinucleated cells, which satisfied major criteria of osteoclasts, including tartrate-resistant acid phosphatase activity, calcitonin receptors, and pit formation on dentine slices. Direct interaction between osteoclast progenitors and osteoblasts was required for IL-17–induced osteoclastogenesis, which was completely inhibited by adding indomethacin or NS398, a selective inhibitor of cyclooxgenase-2 (COX-2). Adding IL-17 increased prostaglandin E₂ (PGE₂) synthesis in cocultures of bone marrow cells and osteoblasts and in single cultures of osteoblasts, but not in single cultures of bone marrow cells. In addition, IL-17 dose-dependently induced expression of osteoclast differentiation factor (ODF) mRNA in osteoblasts. ODF is a membrane-associated protein that transduces an essential signal(s) to osteoclast progenitors for differentiation into osteoclasts. Osteoclastogenesis inhibitory factor (OCIF), a decoy receptor of ODF, completely inhibited IL-17–induced osteoclast differentiation in the cocultures. Levels of IL-17 in synovial fluids were significantly higher in rheumatoid arthritis (RA) patients than osteoarthritis (OA) patients. Anti–IL-17 antibody significantly inhibited osteoclast formation induced by culture media of RA synovial tissues. These findings suggest that IL-17 first acts on osteoblasts, which stimulates both COX-2–dependent PGE₂ synthesis and ODF gene expression, which in turn induce differentiation of osteoclast progenitors into mature osteoclasts, and that IL-17 is a crucial cytokine for osteoclastic bone resorption in RA patients.