Hematopoietic progenitors differentiate into osteoclasts through the influence of systemic hormones and factors produced within the bone marrow microenvironment. Beyond the differentiation to nonhematopoietic tissues, including bone, cartilage, muscle, of pluripotent mesenchymal stem cells (MSCs) are components of this microenvironment and have been shown to produce extracellular matrix, cytokines and growth factors that regulate the formation, activity, and survival of osteoclasts in vitro. In this study, we sought to establish a reproducible coculture model of human osteoclastogenesis using highly purified human MSCs and CD34+ hematopoietic stem cells (HSCs). Fifty milliliters of bone marrow were harvested from breast cancer patients to whom planning autologous BMT. Bone marrow cell suspensions were centrifuged on Ficoll-Paque to isolate mononuclear cells. The mononuclear cell fraction was cultured in standard medium to obtain MSCs. After 4–5 passage mesenchymal differentiation was determined by morphologically, Vimentin, and CD54 and CD58 positivity. Ostoeogenic differentiaiton of MSCs was induced with an osteogenic supplement (OS) containing dexamethasane, B-glycerophosphate, L-ascorbic acid for 12 days incubation. CD34+ HSCs were purified from bone marrow mononuclear cells by positive selection using CliniMACS. Aliquots of DAPI-stained HSCs were added to monolayers of MSCs or OS-treated MSCs, and the coculture was maintained at 37°C in 5 % CO2 for up to 3 weeks. To assess the effect of vitamin D3 on osteoclast formation 1,25(OH)2D3 was added to the coculture. Human fibroblasts were used as negative control instead of MSCs. To determine the role of cell contact in osteoclast formation, experiments were performed in which HSCs and MSCs were cultured in either the same chamber or in chambers separated by 0.45-μm porous membrane for 3 weeks. After 3 weeks, this coculture system yielded that MSCs promote differentiation of DAPI-stained HSCs into TRAP+ multinucleated cells in the absence of added hormones, cytokines, and growth factors. These cells showed CD14, CD11b, CD11c, CD56 positivity, whereas CD34, CD45, HLA-DR, CD13, CD71, CD42 were negative after 3 weeks of culture. In contrast, human fibroblasts failed to support the formation of MNCs, the majority of HSCs degenerated within 2 weeks of culture. Separation of MSCs and HSCs reduced osteoclast formation by 80%, suggesting that cell contact is important, but not absolutely required, for osteoclast formation. OS-treated MSCs actually inhibited the formation of osteoclasts from HSCs. The inhibitory effect of OS-treated MSCs on osteoclast formation is dictated by the differentiated state of MSCs. Osteoclast formation was increased if the coculture was performed in the presence of 1,25(OH)2D3. The data show that MSCs support multilineage differentiation of hematopoietic cells and suggest that our model provides opportunities to understand the mechanisms by which MCSs regulate human osteoclastogenesis.