Osteoclast‐mediated bone resorption is accomplished by secretion of lysosomal proteases into an acidic extracellular compartment. We have previously demonstrated that avian osteoclasts and human osteoclast‐like giant cell tumor cells respond in vitro to treatment with 17β‐estradiol (17β‐E₂) by decreased bone resorption activity. To better understand the mechanism by which this is accomplished, we have investigated the effects of 17β‐E₂ treatment on lysosomal enzyme production and secretion by isolated avian osteoclasts and multinucleated cells from human giant cell tumors in vitro. Isolated cells were cultured with bone particles in the presence of either vehicle or steroid. The conditioned media and cells were harvested, and the levels of cathepsin B, cathepsin L, β‐glucuronidase, lysozyme, and tartrate‐resistant acid phosphatase (TRAP) activities were determined. There was a steroid dose‐dependent decrease in secreted levels of these enzymes. Cell‐associated levels of cathepsin L, β‐glucuronidase, and lysozyme decreased, whereas cell‐associated levels of cathepsin B and TRAP increased. These changes were measurable at 10⁻¹⁰ M and maximal at 10⁻⁸ M 17β‐E₂. The changes were detectable at 4–18 h of treatment and increased through 24 h of treatment. The response was steroid specific, since the inactive estrogen isomer, 17β‐E₂, failed to alter the activity levels. Moreover, the effects of 17β‐E₂ were blocked when the cells were treated simultaneously with the estrogen antagonist ICI182–780 in conjunction with 17β‐E₂. Human osteoclast‐like cells obtained from giant cell tumors of bone responded similarly to estrogen with respect to cathepsin B, cathepsin L, and TRAP activities. However, secretion of β‐glucuronidase and lysozyme were not altered by treatment with 10⁻⁸ M 17β‐E₂. These data indicate that estrogen effects on osteoclast resorption activity may be mediated by decreasing the secretion of cathepsin B, cathepsin L, and TRAP.