A factor which inhibits osteoclast-like cell formation was found in the conditioned medium of human embryonic lung fibroblasts, IMR-90. The factor, termed osteoclastogenesis inhibitory factor, OCIF, was purified to homogeneity. OCIF is a heparin-binding basic glycoprotein and has been isolated as a monomer with an apparent molecular weight (Mr) of 60,000 and a homodimer with a Mr of 120,000. The N-terminus of OCIF is blocked and the determination of internal amino acid sequences revealed that OCIF has no homology to known proteins. OCIF inhibited in a dose-dependent manner osteoclastogenesis elicited through three distinct signaling pathways stimulated by 1 alpha,25-dihydroxy vitamin D3, parathyroid hormone, and interleukin-11, respectively, in a dose range of 1 to 40 ng/ml (IC50 = 4 to 6 ng/ml). OCIF neither inhibits bone resorption by mature osteoclasts nor exerts any other biological activities. These data strongly suggest that OCIF is a novel cytokine which specifically inhibits osteoclastogenesis.