The nuclear receptor and transcription factor, peroxisome proliferator- activated receptor-γ (PPAR-γ), regulates the activity of other transcription factors in the adipogenic differentiation and inflammatory response pathways. We examined the possible function of the PPAR-γ pathway in osteoclast (Ocl) formation from CD34+ hematopoietic stem cells (CD34+ HSCs), using a co-culture system comprised of human mesenchymal stem cells (hMSCs) and CD34+ HSCs, both derived from bone marrow. Ocl formation in this co-culture system is enhanced by the addition of exogenous osteoprotegerin ligand (OPGL), an essential Ocl differentiation factor, and macrophage-colony stimulating factor (M-CSF). The data indicate that soluble OPGL (sOPGL) and M-CSF stimulate Ocl formation in the co-cultures up to 4-fold compared with CD34+ HSCs alone treated with sOPGL and M-CSF. CD34+ HSCs, but not hMSCs, express PPAR-γ, and 15-deoxy-Δ12,14-prostaglandin-J2 (15d-PG-J2), a PPAR-γ agonist, completely blocked the effects of sOPGL and M-CSF on Ocl formation and activity. The inhibitory effect of 15d-PG-J2 is specific to the Ocl lineage in both human and mouse models of osteoclastogenesis. Accordingly, parallel experiments demonstrate that sOPGL activates the NF-κB pathway within mouse Ocl progenitors, and this effect was abolished by 15d- PG-J2. These data establish a link between PPAR-γ and OPGL signaling within Ocl progenitors, and support a role for PPAR-γ pathway in the modulation of osteoclastogenesis.