Aneurysmal bone cyst (ABC) is a benign osteolytic bone lesion in which there are blood-filled spaces separated by fibrous septa containing giant cells. The nature of the giant cells in this lesion and the mechanism of bone destruction in ABC is not certain. In this study, we have analysed several characteristics of mononuclear and multinucleated cells in the ABC and examined the cellular and molecular mechanisms of ABC osteolysis. The antigenic and functional phenotype of giant cells in ABC was determined by histochemistry/immunohistochemistry using antibodies to macrophage and osteoclast markers. Giant cells and CD14 þ and CD14À mononuclear cells were isolated from ABC specimens and cultured on dentine slices and coverslips with receptor activator of nuclear factor kB ligand (RANKL) þ /À macrophage-colony stimulating factor (M-CSF) and functional and cytochemical evidence of osteoclast differentiation sought. Giant cells in ABC expressed an osteoclast-like phenotype (CD51 þ , CD14À, cathepsin K þ , TRAP þ ) and were capable of lacunar resorption, which was inhibited by zoledronate, calcitonin and osteoprotegerin (OPG). When cultured with RANKL ± M-CSF, CD14 þ , but not CD14À, mononuclear cells differentiated into TRAP þ multinucleated cells that were capable of lacunar resorption. M-CSF was not necessary for osteoclast formation from CD14 þ cell cultures. CD14À cells variably expressed RANKL, OPG and M-CSF but supported osteoclast differentiation. Our findings show that the giant cells in ABC express an osteoclast-like phenotype and are formed from CD14 þ macrophage precursors. CD14À mononuclear stromal cells express osteoclastogenic factors and most likely interact with CD14 þ cells to form osteoclast-like giant cells by a RANKL-dependent mechanism.Laboratory Investigation (2012) 92, 600-605; doi:10.1038/labinvest.2012.5; published online 13 February 2012 KEYWORDS: aneurysmal bone cyst (ABC); bisophosphonate; bone resorption; giant cell; osteoclast Benign and malignant tumours that contain numerous osteoclast-like giant cells frequently arise in bone and are categorised on the basis of tissue location and histomorphology. 1,2 The mechanism whereby giant cells accumulate and contribute to the osteolysis that accompanies growth of these tumours in bone is not certain. Primary aneurysmal bone cyst (ABC) is a benign cystic giant cell-rich tumour that arises most commonly in the metaphyseal region of a long bone; 1,2 the cysts are filled with blood and the fibrous cyst wall contains fibroblast-like stromal cells, scattered macrophages and osteoclast-like giant cells. The lesion most commonly arises in the first two decades of life and is a clonal proliferation associated with a characteristic rearrangement of the short arm of chromosome 17. [3][4][5] Osteoclasts are formed from marrow-derived circulating precursors, which express a monocyte/macrophage phenotype. 6,7 These mononuclear phagocyte precursors express the receptor activator of nuclear factor kB (RANK) and, in the presence of macrophage-colony stimulating...