Sphingosine 1‐phosphate (S1P), produced by sphingosine kinase (SPHK), acts both by intracellular and extracellular modes. We evaluated the role of SPHK1 and S1P in osteoclastogenesis using bone marrow‐derived macrophage (BMM) single and BMM/osteoblast coculture systems. In BMM single cultures, the osteoclastogenic factor receptor activator of NF‐κB ligand (RANKL) upregulated SPHK1 and increased S1P production and secretion. SPHK1 siRNA enhanced and SPHK1 overexpression attenuated osteoclastogenesis via modulation of p38 and ERK activities, and NFATc1 and c‐Fos levels. Extracellular S1P had no effect in these cultures. These data suggest that intracellular S1P produced in response to RANKL forms a negative feedback loop in BMM single cultures. In contrast, S1P addition to BMM/osteoblast cocultures greatly increased osteoclastogenesis by increasing RANKL in osteoblasts via cyclooxygenase‐2 and PGE₂ regulation. S1P also stimulated osteoblast migration and survival. The RANKL elevation and chemotactic effects were also observed with T cells. These results indicate that secreted S1P attracts and acts on osteoblasts and T cells to augment osteoclastogenesis. Taken together, S1P plays an important role in osteoclastogenesis regulation and in communication between osteoclasts and osteoblasts or T cells.