We developed a mouse bone marrow culture system to examine the process of osteoclast-like multinucleated cell formation from its progenitors. When mouse marrow cells were cultured for 8 days with la,25-dihydroxyvitamin D₃ [1α,25- (OH)₂D₃, 10^-10 to 10^-7 M] or human PTH (1-34) (25–100 ng/ml), tartrate-resistant acid phosphatase (TRACP)-positive multinucleated cells formed. No TRACP-positive multinucleated cells appeared in the absence of these hormones. 1α,25-(OH)₂D₃ and PTH also increased the number of the clusters of TRACPpositive mononuclear cells. Time course studies showed that these TRACP-positive mononuclear cell clusters appeared before the formation of TRACP-positive multinucleated cells, suggesting that the TRACP-positive mononuclear cells are precursors of the multinucleated cells. Salmon calcitonin markedly inhibited the formation of TRACP-positive multinucleated cells but not TRACP-positive mononuclear cell clusters induced by 1α,25-(OH)₂D₃ or PTH. TRACP-positive mononuclear cells and multinucleated cells were rarely stained for nonspecific esterase, but some mononuclear cells were positively stained for both nonspecific esterase and TRACP. More that 90% of the TRACPpositive mononuclear cell clusters and multinucleated cells were found near colonies of alkaline phosphatase-positive mononuclear cells (possibly osteoblasts). When marrow mononuclear cells were cultured on sperm whale dentine slices in the presence of 1α,25-(OH)₂D₃ or PTH, numerous resorption lacunae were formed. These results suggest that 1) TRACP-positive multinucleated cells formed in response to osteotropic hormones in mouse marrow cultures satisfy most of the criteria of osteoclasts, and 2) osteoblasts may play an important role in osteoclast formation. (Endocrinology122: 1373–1382, 1988)