We examined the mechanism by which M-CSF regulates the cytoskeleton and function of the osteoclast, the exclusive bone resorptive cell. We show that binding of M-CSF to its receptor c-Fms generates a signaling complex comprising phosphorylated DAP12, an adaptor containing an immunoreceptor tyrosine-based activation motif (ITAM) and the nonreceptor tyrosine kinase Syk. c-Fms tyrosine 559, the exclusive binding site of c-Src, is necessary for regulation of DAP12/Syk signaling. Deletion of either of these molecules yields osteoclasts that fail to reorganize their cytoskeleton. Retroviral transduction of null precursors with wild-type or mutant DAP12 or Syk reveals that the SH2 domain of Syk and the ITAM tyrosine residues and transmembrane domain of DAP12 mediate M-CSF signaling. Our data provide genetic and biochemical evidence that uncovers an epistatic signaling pathway linking the receptor tyrosine kinase c-Fms to the immune adaptor DAP12 and the cytoskeleton.