The morphogenesis and remodeling of bone depends on the integrated activity of osteoblasts that form bone and osteoclasts that resorb bone. We previously reported the isolation of a new cytokine termed osteoclastogenesis inhibitory factor, OCIF, which specifically inhibits osteoclast development. Here we report the cloning of a complementary DNA of human OCIF. OCIF is identical to osteoprotegerin (OPG), a soluble member of the tumor-necrosis factor receptor family that inhibits osteoclastogenesis. Recombinant human OPG/OCIF specifically acts on bone tissues and increases bone mineral density and bone volume associated with a decrease of active osteoclast number in normal rats. Osteoblasts or bone marrow-derived stromal cells support osteoclastogenesis through cell-to-cell interactions. A single class of high affinity binding sites for OPG/OCIF appears on a mouse stromal cell line, ST2, in response to 1,25-dihydroxyvitamin D3. An anti-OPG/OCIF antibody that blocks the binding abolishes the biological activity of OPG/OCIF. When the sites are blocked with OPG/OCIF, ST2 cells fail to support osteoclastogenesis. These results suggest that the sites are involved in cell-to-cell signaling between stromal cells and osteoclast progenitors and that OPG/OCIF inhibits osteoclastogenesis by interrupting the signaling through the sites.