Osteogenesis in the developing limb is, as elsewhere, the result of two functionally integrated processes, bone matrix synthesis and matrix degradation. The latter process is a manifestation of the resorptive activity of osteoclasts (OCs), multinucleated giant cells which arise by fusion of mononuclear, blood-borne precursors. For the past several years, we have focused our efforts on several different aspects of OC development and differentiation. These efforts have included observations on patients with osteopetrosis, an analysis of monocyte (OC precursor) chemotaxis in response to bone matrix proteins, and the use of histochemical and bone grafting techniques to establish the lineage and expression of the osteoclast phenotype in the avian embryonic limb. Here, we (1) briefly review the evidence establishing the hematopoietic and probable monocytic origin of OCs, (2) present new data on the role of L-gamma-carboxyglutamic acid in osteocalcin-evoked chemotaxis and (3) describe the time course and likely developmental relationships between the appearance of circulating OC precursor cells, osteoclast differentiation, and the formation of mineralized bone matrix in the chick embryo. The results of the latter study indicate that OC differentiation is initiated by contact between precursor cells and mineralized bone, and suggest that the expression of the OC phenotype is dependent upon proteins or glycoproteins closely associated with bone mineral. We note that osteocalcin is one such protein.