Glucocorticoids have been shown to increase bone resorption in vitro and in vivo, however, the mechanism(s) of this action are not fully understood. Given that human giant cell tumour of bone (GCT) is considered to arise from mesenchymal stromal cells and has the capacity to recruit and harbour macrophages and multinucleated osteoclasts, we have used GCT as a model for studying the effect of glucocorticoids on osteoclast formation. We have demonstrated, by RT-PCR and fluorescence in-situ hybridisation, that both glucocorticoid receptor alpha and beta (GRalpha and GRbeta) gene transcripts were present in the stromal-like tumour cells, macrophage-like cells (putative osteoclast precursors) and multinucleated osteoclast-like cells. Moreover, in the presence of 1,25(OH)(2)D(3), dexamethasone dose-dependently stimulated the formation of osteoclast-like cells from GCT-derived co-culture system of stromal-like tumour cells and macrophage-like cells. The stimulation of osteoclastogenesis by dexamethasone was coincident with the up-regulation of receptor activator of NF-kappaB ligand (RANKL) but down-regulation of osteoprotegerin (OPG) gene expression in stromal-like tumour cells. These data are consistent with the hypothesis that glucocorticoids increase bone resorption by promoting osteoclastogenesis which is at least in part due to the stimulation of RANKL and inhibition of OPG production in bone stromal cells.