Bruton tyrosine kinase (Btk) has a well-defined role in B-cell development, whereas its expression in osteoclasts (OCs) further suggests a role in osteoclastogenesis. Here we investigated effects of PCI-32765, an oral and selective Btk inhibitor, on osteoclastogenesis as well as on multiple myeloma (MM) growth within the BM microenvironment. PCI-32765 blocked RANKL/M-CSF-induced phosphorylation of Btk and downstream PLC-γ2 in OCs, resulting in diminished TRAP5b (ED50 = 17 nM) and bone resorption activity. PCI-32765 also inhibited secretion of multiple cytokines and chemokines from OC and BM stromal cell cultures from both normal donors (ED50 = 0.5 nM) and MM patients. It decreased SDF-1-induced migration of MM cells, and down-regulated MIP1-α/CCL3 in MM cells. It also blocked MM cell growth and survival triggered by IL-6 or coculture with BM stromal cells or OCs in vitro. Importantly, PCI-32765 treatment significantly inhibits in vivo MM cell growth (P < .03) and MM cell-induced osteolysis of implanted human bone chips in SCID mice. Moreover, PCI-32765 prevents in vitro colony formation by stem-like cells from MM patients. Together, these results delineate functional sequelae of Btk activation mediating osteolysis and growth of MM cells, supporting evaluation of PCI-32765 as a novel therapeutic in MM.