Multiple myeloma is largely incurable, despite development of therapies that target myeloma cell-intrinsic pathways. Disease relapse is thought to originate from dormant myeloma cells, localized in specialized niches, which resist therapy and repopulate the tumour. However, little is known about the niche, and how it exerts cell-extrinsic control over myeloma cell dormancy and reactivation. In this study, we track individual myeloma cells by intravital imaging as they colonize the endosteal niche, enter a dormant state and subsequently become activated to form colonies. We demonstrate that dormancy is a reversible state that is switched 'on' by engagement with bone-lining cells or osteoblasts, and switched 'off' by osteoclasts remodelling the endosteal niche. Dormant myeloma cells are resistant to chemotherapy that targets dividing cells. The demonstration that the endosteal niche is pivotal in controlling myeloma cell dormancy highlights the potential for targeting cell-extrinsic mechanisms to overcome cell-intrinsic drug resistance and prevent disease relapse.