In vitro model systems have been used extensively to study factors that affect osteoclast formation and to identify osteoclast precursors. However, in vitro systems do not examine the entire process of osteoclast differentiation simultaneously and lack accessory cells normally present in vivo. Additionally, the role that metabolism of the factor may play on its osteotropic activity in vivo is not addressed by these culture systems. Therefore, we have developed an in vivo model that permits us to examine simultaneously the effects of osteotropic factors on three distinct stages of osteoclast differentiation: (1) multipotent osteoclast precursors, the granulocyte-macrophage colony-forming unit (CFU-GM); (2) more differentiated marrow mononuclear osteoclast precursors; and (3) mature osteoclasts already present on bone surfaces. In the current study, we used interleukin-1 (IL-1) as a prototypic osteotropic factor to test the utility of this system to delineate the cellular mechanisms responsible for enhanced osteoclast activity stimulated by this cytokine. IL-1 induced hypercalcemia and enhanced the growth and differentiation of CFU-GM, increased the number of more committed mononuclear osteoclast precursors, and stimulated mature osteoclasts to resorb bone. These data demonstrate that this simple in vivo model permits the easy delineation of the stages of osteoclast development, in which osteotropic factors act to enhance bone turnover, and may be useful in understanding the mechanism of action of antiresorptive agents.