The nature of keratin-associated giant cells of a pilar tumor of scalp (PTS) was assessed for several osteoclast-like characteristics, including antigenic phenotype, ultrastructure, calcitonin response, and bone resorbing ability. The giant cells, unlike osteoclasts, did not respond morphologically to calcitonin, had the antigenic phenotype of cells of the monocyte/macrophage lineage, and showed ultrastructural features of macrophage polykaryons. However, like osteoclasts, the giant cells were capable of bone resorption, including resorption pit formation. This indicates that the giant cells in PTS are of histiocytic and not osteoclastic differentiation. Bone resorption by tumor-associated macrophage polykaryons shows that this is not a unique defining characteristic of osteoclasts. It also suggests that such histiocytic cells may contribute to the osteolysis associated with skeletal metastases of squamous and other carcinomas.