Osteomacs (OM) are specialized bone‐resident macrophages that are a component of the hematopoietic niche and support bone formation. Also located in the niche are a second subset of macrophages, namely bone marrow–derived macrophages (BM Mφ). We previously reported that a subpopulation of OM co‐express both CD166 and CSF1R, the receptor for macrophage colony‐stimulating factor (MCSF), and that OM form more bone‐resorbing osteoclasts than BM Mφ. Reported here are single‐cell quantitative RT‐PCR (qRT‐PCR), mass cytometry (CyTOF), and marker‐specific functional studies that further identify differences between OM and BM Mφ from neonatal C57Bl/6 mice. Although OM express higher levels of CSF1R and MCSF, they do not respond to MCSF‐induced proliferation, in contrast to BM Mφ. Moreover, receptor activator of NF‐κB ligand (RANKL), without the addition of MCSF, was sufficient to induce osteoclast formation in OM but not BM Mφ cultures. OM express higher levels of CD166 than BM Mφ, and we found that osteoclast formation by CD166−/− OM was reduced compared with wild‐type (WT) OM, whereas CD166−/− BM Mφ showed enhanced osteoclast formation. CD110/c‐Mpl, the receptor for thrombopoietin (TPO), was also higher in OM, but TPO did not alter OM‐derived osteoclast formation, whereas TPO stimulated BM Mφ osteoclast formation. CyTOF analyses demonstrated OM uniquely co‐express CD86 and CD206, markers of M1 and M2 polarized macrophages, respectively. OM performed equivalent phagocytosis in response to LPS or IL‐4/IL‐10, which induce polarization to M1 and M2 subtypes, respectively, whereas BM Mφ were less competent at phagocytosis when polarized to the M2 subtype. Moreover, in contrast to BM Mφ, LPS treatment of OM led to the upregulation of CD80, an M1 marker, as well as IL‐10 and IL‐6, known anti‐inflammatory cytokines. Overall, these data reveal that OM and BM Mφ are distinct subgroups of macrophages, whose phenotypic and functional differences in proliferation, phagocytosis, and osteoclast formation may contribute physiological specificity during health and disease. © 2021 American Society for Bone and Mineral Research (ASBMR).