Osteoclast differentiation from hematopoietic precursors is controlled by the tumor necrosis factor family member tumor necrosis factor-related activation-induced cytokine (TRANCE) via induction of various transcription factors, including nuclear factor of activated T cells (NFAT) c1. During osteoclast differentiation, NFATc1 is further activated via calcium signaling when costimulatory receptors expressed on osteoclast precursors, such as osteoclast-associated receptor (OSCAR), are stimulated. Here we show that NFATc1 expression precedes that of OSCAR during TRANCE-mediated osteoclastogenesis and that inhibition of NFATc1 by cyclosporin A abolishes TRANCE-induced OSCAR expression and subsequent osteoclast differentiation. Moreover, we show that the 1.0-kb promoter region of the OSCAR gene contains three potential NFATc1-binding sites. Induction of an OSCAR promoter-luciferase reporter is significantly increased when transiently transfected into 293T cells in combination with NFATc1 expression plasmid. Deletion and site-directed mutant constructs confirmed that NFATc1-binding sites are both functional and NFATc1-specific. Furthermore, NFATc1 synergistically activates an OSCAR reporter construct together with microphthalmia transcription factor and PU.1, transcription factors previously shown to be critical for osteoclast differentiation. In addition, a plasmid expressing constitutively active MAP kinase kinase 6 enhances the transactivation activity of NFATc1/microphthalmia transcription factor/PU.1 on the OSCAR promoter. Taken together, our results indicate that NFATc1 is an important transcription factor in the induction of OSCAR during osteoclastogenesis. Elucidation of NFATc1 as a transcription factor for OSCAR expression implies the presence of a positive feedback circuit of TRANCE-induced activation of NFATc1, involving NFATc1-mediated OSCAR expression and its subsequent activation of NFATc1, necessary for efficient differentiation of osteoclasts.