Osteoclasts are hemopoietic cells that participate in bone resorption and remodeling. Receptor activator of nuclear factor-kappaB ligand (RANKL) and macrophage colony-stimulating factor (M-CSF) are critical for development of osteoclasts. The Toll-like receptor (TLR) family shares some of the downstream signaling with RANK. The TLR4 ligand, lipopolysaccharide (LPS), is reported to accelerate bone lysis; however, signaling via TLRs has never been reported to induce osteoclastogenesis without RANKL. In this study we showed that significant numbers of mature osteoclasts were generated from protein tyrosine phosphatase Src homology 2-domain phosphatase-1-defective Hcph(me-v)/Hcph(me-v) (me(v)/me(v)) bone marrow cells in the presence of M-CSF and LPS without addition of RANKL in culture. This M-CSF plus LPS-induced osteoclastogenesis was not inhibited by an anti-TNFalpha antagonistic antibody or by osteoprotegerin, a decoy receptor for RANKL. The replacement of RANKL by TLR ligands only occurred with LPS. Other ligands, a peptidoglycan for TLR2 or an unmethylated CpG oligonucleotide for TLR9, did not support osteoclast generation. The osteoclast precursors as well as RANKL-responsive osteoclast precursors were present in the Kit-positive cell-enriched fraction of bone marrow cells. Although me(v)/me(v) bone marrow cells required a comparable concentration of RANKL or TNFalpha as wild-type cells for the initiation of osteoclastogenesis, the numbers of multinucleated osteoclasts in me(v)/me(v) bone marrow cultures were significantly increased by the equivalent dose of RANKL or TNFalpha in the presence of M-CSF. These results indicate that a defect of Src homology 2-domain phosphatase-1 function not only accelerates physiological osteoclast development by RANKL/RANK, but also acquires a novel pathway for osteoclastogenesis by LPS.