Cellular mechanisms that account for tumour osteolysis associated with Ewing’s sarcoma are uncertain. Osteoclasts are marrow-derived multinucleated cells that effect tumour osteolysis. Osteoclasts are known to form from macrophages by both receptor activator for nuclear factor κB ligand (RANKL)-dependent and RANKL-independent mechanisms. In this study our aim has been to determine whether tumour-associated macrophages (TAMs) isolated from Ewing’s sarcoma are capable of differentiating into osteoclasts and to characterise the cellular and humoral mechanisms whereby this occurs. TAMs were isolated from two Ewing’s sarcomas and cultured on both coverslips and dentine slices for up to 21 days with soluble RANKL and human macrophage colony stimulating factor (M-CSF). Osteoclast formation from TAMs (CD14+) was evidenced by the formation of tartrate–resistant acid phosphatase and vitronectin receptor-positive multinucleated cells which were capable of carrying out lacunar resorption. This osteoclast formation and resorption was inhibited by the addition of the bisphosphonate, zoledronate. Osteoclast formation was also seen when Ewing’s sarcoma-derived TAMs were cultured with TNF α in the presence of M-CSF. We also found that TC71 Ewing’s sarcoma cells were capable of independently stimulating osteoclast formation through the release of a soluble factor. These results indicate that TAMs in Ewing’s sarcoma are capable of osteoclast differentiation by both RANKL-dependent and RANKL-independent mechanisms and that Ewing’s sarcoma cells produce an osteoclastogenic factor. The role bisphosphonates may play in inhibiting osteoclast formation and osteolysis in Ewing’s sarcoma merits further investigation.