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Focal bone erosions in areas of pannus invasion are a hallmark of established rheumatoid arthritis (RA). We have utilized histochemical techniques and in situ hybridization to demonstrate that the cells responsible for these bone erosions express an osteoclast phenotype. Our results indicate that the multinucleated cells in resorption lacunae in continuity with pannus express abundant tartrate resistant acid phosphatase (TRAP), cathepsin K and calcitonin receptor (CTR) mRNA. Although CTR expression is restricted to multinucleated and mononuclear cells on the mineralized tissue surfaces, numerous TRAP positive mono- and multinucleated cells are present within the pannus remote from bone surfaces. We speculate that these TRAP positive cells represent osteoclast precursors that are recruited to the pannus tissue. Interaction of these cells with bone and calcified cartilage provides the additional signals that induce these cells to differentiate into resorbing cells with a definitive osteoclast phenotype. To further investigate the specific factors involved in the differentiation of osteoclasts in RA we have initiated studies to examine the expression of a recently described regulator of osteoclastogenesis, osteoclast differentiation factor (ODF), a member of the membrane associated TNF-ligand family, and its putative receptor on osteoclast precursors, the receptor activator of NF-κB (RANK). Analysis of synovial tissues by RT-PCR from eight patients with RA, five with juvenile arthritis and three with normal synovium reveals the expression of mRNA for ODF in 7/8 RA, 5/5 juvenile arthritis, and 0/3 normal cases. These data provide preliminary evidence that ODF may be an important factor in the pathogenesis of osteoclast-mediated bone resorption in RA.