Osteoclasts are bone-resorbing cells essential for skeletal development, homeostasis, and regeneration. They derive from hematopoietic progenitors in the monocyte/macrophage lineage and differentiate in response to RANKL. However, the precise nature of osteoclast progenitors is a longstanding and important question. Using inducible peroxisome proliferator-activated receptor ␥ (PPAR␥)-tTA TRE-GFP (green fluorescent protein) reporter mice, we show that osteoclast progenitors reside specifically in the PPAR␥-expressing hematopoietic bone marrow population and identify the quiescent PPAR␥ ؉ cells as osteoclast progenitors. Importantly, two PPAR␥-tTA TRE-Cre-controlled genetic models provide compelling functional evidence. First, Notch activation in PPAR␥ ؉ cells causes high bone mass due to impaired osteoclast precursor proliferation. Second, selective ablation of PPAR␥ ؉ cells by diphtheria toxin also causes high bone mass due to decreased osteoclast numbers. Furthermore, PPAR␥ ؉ cells respond to both pathological and pharmacological resorption-enhancing stimuli. Mechanistically, PPAR␥ promotes osteoclast progenitors by activating GATA2 transcription. These findings not only identify the long-sought-after osteoclast progenitors but also establish unprecedented tools for their visualization, isolation, characterization, and genetic manipulation.Bone is a dynamic tissue that constantly remodels itself by balancing osteoclast-mediated bone resorption and osteoblastmediated bone formation. Osteoclasts derive from hematopoietic progenitors (5) in the monocyte/macrophage lineage (41, 47); in contrast, osteoblasts are of mesenchymal lineage (38). Physiological osteoclast functions are essential for skeletal development, homeostasis, and regeneration in response to injury. However, pathological increases in osteoclast activities are associated with several diseases, including osteoporosis, arthritis, and bone metastasis of cancers (35).Osteoclast lineage specification is a multistep process that requires osteoclast progenitor commitment (41, 47), macrophage colony-stimulating factor (M-CSF)-mediated osteoclast precursor proliferation (57), and RANKL (receptor activator of NF-B ligand)-mediated osteoclast differentiation (8,29,56). Although the discovery of RANKL has revolutionized research in osteoclast biology, RANKL mainly acts at later stages of osteoclastogenesis. The cellular identity and the precise nature of the bona fide osteoclast progenitors are underexplored. Previous studies have elegantly characterized the cell surface markers that enrich osteoclast progenitors using flow cytometry (25); however, tools are lacking to label osteoclast progenitors in vivo for visualization, isolation, and lineage tracing, as well as to genetically manipulate osteoclast progenitors for functional characterization.Peroxisome proliferator-activated receptor ␥ (PPAR␥) is a member of the nuclear receptor family of transcription factors that can be activated by lipophilic ligands, including the diabetic drug rosiglitazone (BRL, or Ava...