Innate immune responses play important roles in material-induced bone formation and such roles were further explored in the current study with an emphasis on M2 macrophages and osteoclastogenesis. With the presence of M-CSF and RANKL, M0 macrophages from FVB mouse bone marrow-derived monocytes (BMMs) fused to osteoclasts with both M2 marker and osteoclast marker at day 5, and such osteoclast formation at day 5 was enhanced when the cells were treated with IL-4 at day 3. With IL-4 treatment alone for 24 h, M0 polarized into M2 macrophages. Conditioned medium of M2 macrophages enhanced osteogenic differentiation of MC3T3-E1 (pre-osteoblasts) while osteoclast conditioned medium enhanced osteogenic differentiation of CRL-12424 (osteogenic precursors). TCPs (a typical osteoinductive material) supported M2 macrophage polarization at day 4 and osteoclast formation at day 5, while TCPb (a typical non-osteoinductive material) was less effective. Moreover, osteoclasts formed on TCPs produced osteogenic factors including S1P, Wnt10B and BMP-6, resulting osteogenic differentiation of CRL-12424 cells. Similar to in vitro testing, TCPs favored M2 macrophage polarization followed by the formation of osteoclasts in vivo, as compared to TCPb. The overall data provided evidence of a coupling between M2 macrophages, osteoclasts and material-induced bone formation: osteoclasts formed from M2 macrophages secrete osteogenic cytokines to induce osteogenic differentiation of osteogenic precursor cells to finally form bone. The current findings outlined a biological mechanism of material-induced bone formation and further rationalized the use of osteoinductive materials for bone regeneration. STATEMENT OF SIGNIFICANCE: This paper provides evidence for finding out the relationship between M2 macrophages, osteoclasts and osteogenesis in material-induced bone formation. It suggested that osteoinductive materials enhanced macrophage polarization to M2 macrophages which fuses to osteoclasts, osteoclasts subsequently secret osteogenic cytokines to differentiate finally osteogenic precursors to form bone in osteoinductive materials. The data supports scientifically the superiority of osteoinductive materials for bone regeneration in clinics.