The site of action of cysteine-proteinases (CPs) and matrix metalloproteinases (MMPs) in the degradation of bone collagen by osteoclasts was investigated by evaluating the effects of the CP-inhibitor trans-epoxy-succinyl-L-leucylamido (4-guanidino)-butane (E-64) and the MMP-inhibitor N-(3-N-benzyloxycarbonyl amino-1-R-carboxypropyl)-L-leucyl-O-methyl-L-tyrosine N-methylamide (Cl-1) in an in vitro model system of PTH-stimulated mouse calvaria. In the presence of each of the two inhibitors a large area of collagen free of mineral crystallites was seen adjacent to the ruffled border of the osteoclasts. Following a culture period of 24 h this area proved to be about 10 times larger in inhibitor-treated explants than in controls. Moreover the percentage of osteoclasts in close contact with such demineralized bone areas appeared to be significantly higher in inhibitor-treated explants than in control specimens (60% and 5%, respectively). These effects were not apparent when the osteoclastic activity was inhibited with calcitonin. No significant differences were found between the effects of the two inhibitors, E-64 and Cl-1. Our observations indicate that under the influence of inhibitors of MMPs and CPs demineralization of bone by osteoclasts proceeded up to a certain point whereas matrix degradation was strongly inhibited. It is concluded that within the osteoclastic resorption lacuna both CPs and MMPs participate in the degradation of the collagenous bone matrix.