T cells are critical regulators of osteoclast differentiation and function in bone, but whether osteoclasts can, in turn, regulate T cell homing, and response to stimuli is unclear. To investigate whether osteoclasts are immune competent cells, the expression of HLA Class II and costimulatory receptors was evaluated by RT-PCR and immunohistochemistry by comparing osteoclast precursors and mature osteoclasts. T-cell-attracting chemokines were measured in the supernatants of confluent cultures of osteoclasts and compared with mesenchymal stromal cells and osteoblasts. T cell proliferation, cytokine production, and apoptosis were assayed in co-cultures with osteoclasts in the presence or absence of mitogenic stimuli. To define the mechanism of action of osteoclasts, cytokine-blocking experiments were performed. Our findings revealed that mature osteoclasts constitutively expressed Class II HLA in the membrane and upregulate the expression of CD40 and CD80 during differentiation. Osteoclasts secreted high levels of most T cell chemoattractants and effectively retained T cells in adhesion assays. Moreover, the osteoclasts potently blunted T cell response to PHA and CD3/CD28 stimulation, thus inhibiting proliferation, suppressing T cell TNFα and IFNγ production and decreasing T cell apoptosis by a mostly cell-contact independent mechanism. In conclusion, osteoclasts are immune-competent cells which can retain T cells and suppress in vitro T cell response to proliferative stimuli. J. Cell. Physiol. 226: 982–990, 2011. © 2010 Wiley-Liss, Inc.