Multinucleated cells were generated from human bone marrow cultured in the presence of 10⁻⁶M 1,25(OH)₂D₃ and 10⁻⁶M all-trans-retinoic acid for 3–4 weeks. These multinucleated cells have the phenotypic and functional characteristics of osteoclasts as judged by (a) immunostaining with osteoclast specific monolconal antibodies 13C2 and 23C6 (b) expression of tartrate resistant acid phosphatase, an enzyme marker of osteoclast differentiation: and (c) the ability to resorb bone in vitro. The multinucleated cells appeared to form by fusion of large mononuclear cells. The monolconal antibodies 13C2 and 23C6 stained 60–90% of the multinucleated cells, and 40–60% of the large mononuclear cells. Tartrate resistant acid phosphatase activity was expressed by 80–95% of the multinucleated cells and 60–80% of the large mononuclear cells. Scanning electron microscopy of bone wafers co-incubated with the multinucleated cells, for 7 days, revealed resorption pits. These findings suggest that in the presence of 1,25(OH)₂D₃ the marrow cells differentiated into multinucleated and large mononucleated cells in which a proportion of them expressed osteoclast phenotype and resorbed bone.