Chronic corticosteroid treatment is known to induce bone loss and osteoporosis. Osteoclasts are specialised bone-resorbing cells that are formed from mononuclear phagocyte precursors that circulate in the monocyte fraction. In this study we have examined the effect of the synthetic glucocorticoid, dexamethasone, on human osteoclast formation and bone-resorbing activity. Human monocytes were cultured for up to 21 days on glass coverslips and dentine slices, with soluble receptor activator for nuclear factor kappaB ligand (RANKL; 30 ng/ml) and human macrophage-colony stimulating factor (M-CSF; 25 ng/ml) in the presence and absence of dexamethasone (10(-8) M). The addition of dexamethasone over a period of 7 and 14 days of culture of monocytes (during which cell proliferation and differentiation predominantly occurred) resulted in a marked increase in the formation of tartrate-resistant acid phosphatase-positive multinucleated cells and an increase in lacunar resorption. The addition of dexamethasone to monocyte cultures after 14 days (when resorptive activity of osteoclasts had commenced) reduced the extent of lacunar resorption compared with cultures to which no dexamethasone had been added. The addition of dexamethasone to osteoclasts isolated from giant cell tumours of bone significantly inhibited resorption pit formation. Our findings indicate that dexamethasone has a direct effect on osteoclast formation and activity, stimulating the proliferation and differentiation of human osteoclast precursors and inhibiting the bone-resorbing activity of mature osteoclasts.