Although multiple hormones and cytokines regulate various aspects of osteoclast formation, the final two effectors are osteoprotegerin ligand (OPG‐L)/osteoclast differentiation factor (ODF), a recently cloned member of the tumor necrosis factor superfamily, and macrophage colony–stimulating factor. OPG‐L/ODF is produced by osteoblast lineage cells and exerts its biological effects through binding to its receptor, osteoclast differentiation and activation receptor (ODAR)/receptor activator of NF‐κB (RANK), on osteoclast lineage cells, in either a soluble or a membrane‐bound form, the latter of which requires cell‐to‐cell contact. Binding results in rapid differentiation of osteoclast precursors in bone marrow to mature osteoclasts and, at higher concentrations, in increased functional activity and reduced apoptosis of mature osteoclasts. The biological activity of OPG‐L/ODF is neutralized by binding to osteoprotegerin (OPG)/osteoclastogenesis inhibitory factor (OCIF), a member of the TNF‐receptor superfamily that also is secreted by osteoblast lineage cells. The biological importance of this system is underscored by the induction in mice of severe osteoporosis by targeted ablation of OPG/OCIF and by the induction of osteopetrosis by targeted ablation of OPG‐L/ODF or overexpression of OPG/OCIF. Thus, osteoclast formation may be determined principally by the relative ratio of OPG‐L/ODF to OPG/OCIF in the bone marrow microenvironment, and alterations in this ratio may be a major cause of bone loss in many metabolic disorders, including estrogen deficiency and glucocorticoid excess. That changes in but two downstream cytokines mediate the effects of large numbers of upstream hormones and cytokines suggests a regulatory mechanism for osteoclastogenesis of great efficiency and elegance.