TNF-induced receptor activator NF-κB ligand (RANKL) synthesis by bone marrow stromal cells is a fundamental component of inflammatory osteolysis. We found that this process was abolished by IL-1 receptor antagonist (IL-1Ra) or in stromal cells derived from type IIL-1 receptor-deficient (IL-1RI-deficient) mice. Reflecting sequential signaling of the cytokines TNF and IL-1, TNF induces stromal cell expression of IL-1 and IL-1RI. These data suggest that TNF regulates RANKL expression via IL-1, and, therefore, IL-1 plays a role in TNF-induced periarticular osteolysis. Consistent with this posture, TNF-stimulated osteoclastogenesis in cultures consisting of WT marrow macrophages and stromal cells exposed to IL-1Ra or in cocultures established with IL-1RI-deficient stromal cells was reduced approximately 50%. The same magnitude of osteoclast inhibition occurred in IL-1RI-deficient mice following TNF administration in vivo. Like TNF, IL-1 directly targeted osteoclast precursors and promoted the osteoclast phenotype in a TNF-independent manner in the presence of permissive levels of RANKL. IL-1 is able to induce RANKL expression by stromal cells and directly stimulate osteoclast precursor differentiation under the aegis of p38 MAPK. Thus, IL-1 mediates the osteoclastogenic effect of TNF by enhancing stromal cell expression of RANKL and directly stimulating differentiation of osteoclast precursors.