Objective. TSG-6 (the product of tumor necrosis factor [TNF]-stimulated gene 6) has a potent inhibitory effect on RANKL-mediated bone erosion. The aim of this study was to compare the activity of TSG-6 with that of osteoprotegerin (OPG) and to investigate its role as an autocrine modulator of cytokine-mediated osteoclast formation/activation. We also determined TSG-6 expression in inflammatory joint disease.Methods. The effects of TSG-6, OPG, and the inflammation mediators TNF␣, interleukin-1 (IL-1), and IL-6 on the formation of osteoclasts from peripheral blood mononuclear cells and synovial fluid (SF) macrophages were determined by tartrateresistant acid phosphatase staining. Lacunar resorption and filamentous actin ring formation were measured as indicators of osteoclast activity. The amount of TSG-6 in culture media or SF was quantified by enzyme-linked immunosorbent assay, and expression of TSG-6 in synovial tissue was assessed by immunohistochemistry.Results. TSG-6 acted in synergy with OPG to inhibit RANKL-mediated bone resorption and was produced by osteoclast precursors and mature osteoclasts in response to TNF␣, IL-1, and IL-6. Expression of TSG-6 correlated with inhibition of lacunar resorption; this effect was ameliorated by an anti-TSG-6 antibody. The level of TSG-6 protein was determined in SF from patients with various arthritides; it was highest in patients with inflammatory conditions such as rheumatoid arthritis, in which it correlated with the amount of TSG-6 immunostaining in the synovium. TSG-6 inhibited the activation but not the formation of osteoclasts from SF macrophages.Conclusion. In the presence of inflammatory cytokines, osteoclasts produced TSG-6 at concentrations that are sufficient to inhibit lacunar resorption. This may represent an autocrine mechanism to limit the degree of bone erosion during joint inflammation.