Mice lacking the proto-oncogene c-fos develop the bone disease osteopetrosis. Fos mutant mice were found to have a block in the differentiation of bone-resorbing osteoclasts that was intrinsic to hematopoietic cells. Bone marrow transplantation rescued the osteopetrosis, and ectopic c-fos expression overcame this differentiation block. The lack of Fos also caused a lineage shift between osteoclasts and macrophages that resulted in increased numbers of bone marrow macrophages. These results identify Fos as a key regulator of osteoclast-macrophage lineage determination in vivo and provide insights into the molecular mechanisms underlying metabolic bone diseases.