The giant cell tumor of bone (GCT) is a local osteolytic tumor with variable degrees of aggressiveness. In rare cases pulmonary metastases can be observed. The lesion most frequently occurs in the epiphysis of long tubular bones of the knee region, predominantly affecting young adults after closure of the growth plate. The characteristic histological appearance of GCT displays a high number of osteoclast-like multinucleated giant cells, which resulted in the classification "osteoclastoma" or "giant cell tumor". Apart from the multinucleated giant cells, there are two mononuclear cell types in the GCT. The first one has a round morphology and resembles a monocyte. The second cell type is the spindle-shaped, fibroblast-like stromal cell. Cell culture experiments with GCT cells revealed the stromal cell to be the proliferating component of the GCT. The other two cell types, the monocyte and the multinucleated giant cell, were lost after a few cell culture passages. Furthermore, latest results from GCT reveal that the stromal cells secrete a variety of cytokines and differentiation factors, including MCP1, ODF and M-CSF. These molecules are monocyte chemoattractants and are essential for osteoclast differentiation, suggesting that the stromal cell stimulates blood monocyte immigration into tumor tissue and enhances their fusion into osteoclast-like, multinucleated giant cells. The multinucleated giant cell itself demonstrates properties of a normal osteoclast that is able to resorb bone leading to extended osteolysis. This new model of GCT genesis supports the hypothesis that the stromal cell is the neoplastic component whilst the monocytes and the multinucleated giant cells are just a reactive component of this tumor. Taking this into consideration, the nomenclature of the "giant cell tumor" needs to be reconsidered.