Osteoprotegerin ligand (OPGL) is a newly discovered molecule which is essential for osteoclast differentiation. Both OPGL and its soluble decoy receptor, osteoprotegerin (OPG), which inhibits osteoclast formation, are known to be produced by osteoblasts and inflammatory cells found in the rheumatoid arthritis (RA) synovium. In this study, RA synovial macrophages were incubated in the presence or absence of OPGL, macrophage‐colony stimulating factor (M‐CSF), and dexamethasone for various time points. The results indicated that osteoclast formation from RA synovial macrophages is OPGL‐dependent and that OPGL and M‐CSF are the only humoral factors required for RA synovial macrophage–osteoclast differentiation. OPG was found to inhibit osteoclast formation by RA synovial macrophages in a dose‐dependent manner. This study has shown that macrophages isolated from the synovium of RA patients are capable of differentiating into osteoclastic bone‐resorbing cells; this process is OPGL‐ and M‐CSF‐dependent and is modulated by corticosteroids. Cellular (T and B cells, dendritic cells) and humoral factors in RA synovium and bone may influence osteoclast formation and bone resorption by controlling OPGL/OPG production. Copyright © 2000 John Wiley & Sons, Ltd.