It is believed that parathyroid hormone (PTH) increases the resorptive activity of pre-existing osteoclasts through a primary interaction with cells of the osteoblastic lineage. Much less is known, however, of the mechanisms by which PTH induces osteoclast formation. It is known that osteoclast formation occurs through a contact-dependent interaction between stromal cells and haemopoietic precursors, but it is not known whether PTH acts on stromal cells or precursors to induce osteoclast formation. To address this issue, we compared the ability of haemopoietic cultures to generate osteoclasts, identified as calcitonin receptor positive (CTRP) cells, and to resorb bone in response to PTH and 1,25(OH) 2 vitamin D 3 (1,25(OH) 2 D 3 ). We found that when murine haemopoietic tissues were incubated at densities sufficiently high to support haemopoiesis, both PTH and 1,25(OH) 2 D 3 induced bone resorption in bone marrow cells, but in cultures of haemopoietic spleen only 1,25(OH) 2 D 3 induced CTRP cells, and neither hormone induced bone resorption. To determine whether these differences were attributable to differences in stromal cells or haemopoietic precursors, lower densities of haemopoietic spleen cells were incubated on osteoblastic (UMR 106), splenic or bone marrow stromal cells. We found that the behaviour of the cocultures reflected the characteristics and origin of the stromal cells. Thus, the ability of both osteoblastic and splenic stromal cells to induce CTRP cells with 1,25(OH) 2 D 3 , while only osteoblastic cells induced osteoclasts with PTH, from the same precursors, suggests that the ability of PTH to induce osteoclastic differentiation cannot be attributed to a hormonal action on osteoclast precursors, but depends on a response in stromal cells.