The coupling of bone resorption and formation suggests that autocrine and paracrine factors are produced and released within the local bone environment. Since osteoblasts secrete latent transforming growth factor β (TGF‐β), and osteoclasts can activate this latent complex, one candidate paracrine coupling factor is TGF‐β. To examine whether TGF‐β is also a potential osteoclast‐derived autocrine and paracrine factor, highly purified avian osteoclasts were examined for synthesis of TGF‐β and the mechanism by which osteoclasts activate the latent TGF‐β complex was investigated. TGF‐β protein production was measured within 4 h of culture in osteoclast‐conditioned media using growth factor inhibition of CCL‐64 cells and verified by blocking effects with anti‐TGF‐β antibodies. Synthesis of TGF‐β was confirmed by northern blotting and metabolic labeling. Northern blots of total RNA revealed that osteoclasts expressed the mRNA for TGF‐β₂, β₃, and β₄. Biosynthetic studies suggest that TGF‐β₂ was the principle form secreted in culture. Nearly all the TGF‐β that was secreted had been activated by the osteoclasts. When presented with exogenous latent TGF‐β, osteoclasts activated latent TGF‐β from a variety of sources. Furthermore, osteoclast‐conditioned media retained the ability to activate latent TGF‐β during cell‐free incubations at 37°C. Osteoclast‐mediated activation was inhibited by proteinase inhibitors, weak base treatment of the cells, or disruption of the cytoskeletal network. These data suggest that osteoclasts may secrete proteinases into the extracellular milieu to activate latent TGF‐β and that TGF‐β may be an autocrine factor involved in regulating osteoclast activity.