The osteoclast is known to be derived from the hemopoietic stem cell, but its lineage and the mechanisms by which its differentiation is regulated are largely unknown. There is evidence that osteoclastic differentiation is induced through a contact-dependent interaction between bone marrow stromal cells and hemopoietic precursors. To analyze osteoclastic lineage, colonies were generated in semi-solid medium from mouse spleen cells in the presence of erythropoietin with either Wehi 3B-conditioned medium or interleukin 3 (IL3). After 7 days, individual colonies were picked. Half of each colony was phenotyped by the morphology of cells in cytospin preparations; the second half of each was incubated for 7 days with a bone marrowderived cell line (ts8) that induces osteoclastic differentiation from hemopoietic cells, on bone slices in the presence of 1,25- dihydroxyvitamin D3. After incubation, bone resorption was assessed by scanning electron microscopy. No resorption was induced in cells derived from single-lineage colonies, but resorptive cells differentiated in 17% of granulocyte-macrophage (GM) colonies and 38% of multilineage colonies. Since only a minority of GM colonies contained osteoclastic precursors, this suggests that the GM colonies that contained osteoclasts were not typical GM colonies but may have been a form of multilineage colony analagous to other multilineage colonies that contain granulocytes, macrophages, and a third cell type. No resorptive cells were formed when IL3-derived colonies were incubated on bone slices without ts8 cells. The results suggest that osteoclasts are derived from a multilineage precursor, upon which IL3 acts to generate cells capable of osteoclastic differentiation, which form resorptive cells upon incubation with bone marrow stromal cells in the presence of 1,25-dihydroxyvitamin D3 (Endocrinology128: 259–262, 1991)