1. Bone is unique in its combination of cells, matrix and mineral. 2. It has a dual function in skeletal and mineral homeostasis. 3. Cells which are functionally different act as coordinated units depending on a variety of signals which may be hormonal, ionic, mechanical and, possibly, electrical. 4. The coordinated activity of the cells is brought about by their having an intimate structural interrelationship, by the probability of their being subject to the influence of factors contained within an extra-cellular fluid circulating around all the cells underlying the mesenchymal cell envelope, and by the possibility that the osteoclasts and osteoblasts do not represent an end-stage in differentiation. 5. The understanding of the factors which normally control cellular differentiation and function may lead to methods of reversing bone loss, rectifying the effects of metabolic bone disease and promoting the healing of fractures.