Positive identification of osteoclast percursors has not yet been possible. The authors have, in the present report, used a model system in the rat in which it is possible to induce the formation of multinucleated osteoclasts at a predictable and reproducible site and time (Tran Van P, Vignery A, Baron R. Anat Rec 1982, 202:445-451; Cell Tissue Res 1982, 225:283-292). This system allowed the investigation of the cellular events occurring locally during the recruitment and differentiation of osteoclast precursors. Prior to the formation of multinucleated osteoclasts, mononuclear cells positive for fluoride-inhibitable nonspecific esterase and cells positive for tartrate-resistant acid phosphatase increase in number locally. Double staining procedures demonstrated the presence of both enzymes in a number of cells, thereby suggesting that they are steps in the differentiation of a single cell population. Ultrastructural studies show that lysosomal enzymes are present in every compartment of the biosynthetic pathway, in small primary lysosomes and various forms of storage granules. As these precursors arrive at the bone surface, the storage granule lysosomes are markedly depleted. It is concluded that mononuclear precursors of the osteoclast are members of the mononuclear-phagocyte lineage and differentiate early to synthesize, store, and later secrete large quantities of lysosomal enzymes. The mature osteoclast, which, as its precursor, is positive for the mononuclear-phagocyte marker enzyme nonspecific esterase, results from the fusion of these mononuclear precursors, which occurs only after their attachment to the bone surface to be resorbed.