Osteoclasts are thought to belong to a macrophage lineage. However, the nature of common precursors of osteoclasts and macrophages remains to be investigated. We have characterized the differentiation potential of mouse bone marrow macrophages into mature osteoclasts. Monocyte macrophage-colony-stimulating factor (M-CSF) stimulated the proliferation of bone marrow macrophages in a dose-dependent manner and these M-CSF-dependent bone marrow macrophage (MDBM) cells efficiently differentiated into the tartrate-resistant acid phosphatase (TRAP)-positive osteoclasts in the presence of soluble RANKL (sRANKL) and M-CSF in the in vitro culture. The macrophage-like cell line TMC16 was established from tsA58 (temperature-sensitive SV40 large T-antigen) transgenic mice in the same manner to the preparation of MDBM cells and also differentiated into mature osteoclasts. During this differentiation in vitro, the morphology of the cells changed from spindle to round and smaller (termed pOC) on day 2 and to multinuclear (termed multinucleated cells [MNCs]) on day 4. The surface expression of macrophage marker CD14 was down-regulated and that of CD43 was up-regulated on pOC, analyzed by flow cytometry. RNA analysis revealed that osteoclast marker genes such as calcitonin receptor (CTR), carbonic anhydrase II (CAII), cathepsin K (cath K), MMP9, and TRAP were strongly expressed in MNCs and weakly in pOC whereas MDBM cells did not express these genes. However, the osteopontin (OPN) gene was strongly expressed in MDBM cells and this expression became weakened after differentiation into pOC. The TMC16 cell line weakly expressed cath K, TRAP, and OPN, suggesting that the TMC16 cell line is immortalized at a stage slightly differentiated from MDBM cells. Furthermore, cell sorting analysis revealed that osteoclast early progenitors in bone marrow cells are preferentially present in the Mac-1− F4/80dull population, which differentiated into MDBM cells (the osteoclast progenitor) expressing Mac-1+ F4/80int, suggesting that M-CSF plays roles of a differentiation factor as well as a growth factor for osteoclast early progenitors. These results showed the transition of morphology, surface markers, and gene expression from the early to mature stage in osteoclast differentiation. We propose three differentiation stages in the osteoclast lineage: the pro-osteoclast (spindle-shaped macrophage cells), the pre-osteoclast (small round mononucleated TRAP-positive cells), and the mature osteoclast (multinucleated TRAP-positive cells) stage.