Human recombinant cystatin D also inhibited M-CSF/RANKL stimulated osteoclast formation in BMM cultures, whereas the MMP-inhibitor TIMP-1 had no effect. The amino-terminal segment Arg-Leu-Val-Gly (RLVG) of the cystatin C molecule is an important part of the cysteine proteinase inhibitory center. Similar to cystatin C, Z-RLVG-CHN2 inhibited M-CSF/RANKL stimulated osteoclast formation in BMM cultures. Z-RLVG-CHN2 in which the reactive diazomethane group was substituted for by non-reactive groups (-OH, -NH2, -N(CH3)2) did not affect osteoclastogenesis. The fungal cysteine proteinase inhibitor E-64 also inhibited M-CSF/ RANKL stimulated osteoclast formation. The inhibitory effect by cystatin C was observed when cystatin C was added 1-6 h after RANKL, partially lost when added 12 h after RANKL, and completely lost when added 24 h after RANKL stimulation. Inhibition of osteoclast formation was associated with cystatin C induced inhibition of RANKL stimulated mRNA expression of Calcr, Acp5, Ctsk, Mmp-9, Intb3 and Atp6i, as well as of TRAP protein. Treatment with cystatin C maintained the M-CSF/RANKL stimulated BMM at a macrophage phenotype as assessed by the ability to phagocytose FITC-labelled zymosan particles and increased mRNA expression of the macrophage transcription factor Irf-8. The enhanced expression of osteoclastic transcription factors c-Fos and NFATc1 induced by RANKL was strongly inhibited by cystatin C. These data show that cystatin C can act directly on purified osteoclast progenitors to inhibit differentiation from macrophages to osteoclasts by affecting the differentiation process at an early step. The mechanism is due to inhibition of the osteoclastic transcription factors c-Fos and NFATc1. Disclosure of Interest: None declared