Using the hypoxia marker EF-5 we found that in mice with CIA, synovial cells invading bone and cartilage are exposed to reduced oxygen levels. Expression profile studies identified Id-2 as being upregulated under low oxygen conditions. In addition, IL-1beta stimulation increased the expression of Id-2 in these cells. Histological studies of RA synovium and CIA synovium showed strong expression of Id-2 in SF at sites of synovial invasion into bone. Overproduction of Id-2 in SF by stable transfection triggered the expression of several genes promoting osteoclastogenesis, including BMP-2, PTHrP, Wnt5a and vascular endothelial growth factor. Conversely, the suppression of endogenous Id-2 led to the downregulation of the expression of these molecules. Consistent with these findings coculture of Id-2 transfected SF with bone marrow cells increased the expression of the osteoclast differentiation factor RANKL, and decreased the expression of the osteoclast inhibitory factor osteoprotegerin in bone marrow stromal cells, which was followed by an increase in the number of osteoclasts.