AbstractPaget's disease (PD) of bone is characterized by increased activity of large abnormal osteoclasts (OCLs) which contain paramyxoviral nuclear and cytoplasmic inclusions. MVNP gene expression has been shown to induce pagetic phenotype in OCLs. We previously characterized the osteoclast inhibitory peptide‐1 (OIP‐1/hSca) which inhibits OCL formation/bone resorption. OIP‐1 is a glycophosphatidylinositol (GPI)‐linked membrane protein containing a 79 amino acid extra cellular peptide and a 32 amino acid carboxy terminal GPI‐linked peptide (c‐peptide) which is critical for OCL inhibition. In this study, we demonstrate that OIP‐1 c‐peptide significantly decreased (43%) osteoclast differentiation of peripheral blood mononuclear cells from patients with PD. Also, OIP‐1 treatment to normal human bone marrow mononuclear cells transduced with the MVNP inhibited (41%) osteoclast precursor (CFU‐GM) growth in methyl‐cellulose cultures. We further tested if OIP‐1 overexpression in the OCL lineage in transgenic mice inhibits MVNP stimulated OCL formation. MVNP transduction and RANKL stimulation of OIP‐1 mouse bone marrow cells showed a significant decrease (43%) in OCL formation and inhibition (38%) of bone resorption area compared to wild‐type mice. Western blot analysis identified that OIP‐1 decreased (3.5‐fold) MVNP induced TRAF2 expression during OCL differentiation. MVNP or OIP‐1 expression did not affect TRAF6 levels. Furthermore, OIP‐1 expression resulted in a significant inhibition of MVNP stimulated ASK1, Rac1, c‐Fos, p‐JNK, and NFATc1 expression during OCL differentiation. These results suggest that OIP‐1 inhibits MVNP induced pagetic OCL formation/activity through suppression of RANK signaling. Thus, OIP‐1 may have therapeutic utility against excess bone resorption in patients with PD. J. Cell. Biochem. 104: 1500–1508, 2008. © 2008 Wiley‐Liss, Inc.