Rheumatoid arthritis (RA) is characterized by the appearance of progressive joint damage that may be identified only months after the onset of symptoms. Early cartilage and bone erosion is associated with the accumulation of several cell populations in the synovial membrane (SM) and the formation of a proliferating pannus. The synovial sublining layer contains several cell populations including macrophages, T and B lymphocytes, dendritic cells, and polymorphonuclear leukocytes. The lining layer contains large numbers of macrophages and fibroblast-like synoviocytes. The interface between pannus and cartilage is occupied predominantly by activated macrophage populations and synoviocytes capable of secreting destructive proteases in abundance. We have observed that macrophages aggregate preferentially adjacent to the cartilage-pannus junction (CPJ) and express differentiation phenotypes that are absent from the lining layer macrophages of more remote SM. Moreover, in a prospective study, the number of SM macrophages correlated with the degree of joint damage occurring over one year. Similar results were obtained when SM biopsy samples were analyzed and correlated with clinical and radiological changes occurring over 6 years. Macrophages and synoviocytes at the CPJ express matrix metalloproteinase and cathepsin mRNA from the earliest stage of RA. The mechanisms involved in the secretion of tissue degrading enzymes by macrophages and synoviocytes are undergoing further investigation and preliminary results suggest that different regulation pathways may exist.