Breast cancer commonly causes osteolytic metastases in bone, a process that is dependent on tumor-stromal interaction. Proteases play an important role in modulating tumorstromal interactions in a manner that favors tumor establishment and progression. Whereas several studies have examined the role of proteases in modulating the bone microenvironment, little is currently known about their role in tumor-bone interaction during osteolytic metastasis. In cancer-induced osteolytic lesions, cleavage of receptor activator of nuclear factor-KB ligand (RANKL) to a soluble version (sRANKL) is critical for widespread osteoclast activation. Using a mouse model that mimics osteolytic changes associated with breast cancer-induced bone metastases, we identified cathepsin G, cathepsin K, matrix metalloproteinase (MMP)-9, and MMP13 to be proteases that are up-regulated at the tumor-bone interface using comparative cDNA microarray analysis and quantitative reverse transcription-PCR. Moreover, we showed that cathepsin G is capable of shedding the extracellular domain of RANKL, generating active sRANKL that is capable of inducing differentiation and activation of osteoclast precursors. The major source of cathepsin G at the tumor-bone interface seems to be osteoclasts that up-regulate production of cathepsin G via interaction with tumor cells. Furthermore, we showed that in vitro osteoclastogenesis is reduced by inhibition of cathepsin G in a coculture model and that in vivo inhibition of cathepsin G reduces mammary tumor-induced osteolysis. Together, our data indicate that cathepsin G activity at the tumor-bone interface plays an important role in mammary tumor-induced osteolysis and suggest that cathepsin G is a potentially novel therapeutic target in the treatment of breast cancer bone metastasis. [Cancer Res 2008;68(14):5803-11]