Fusion of macrophages is an essential step in the differentiation of osteoclasts, which play a central role in the development and remodeling of bone. Osteoclasts are important mediators of bone loss, which leads, for example, to osteoporosis. Macrophage fusion receptor/signal regulatory protein alpha (MFR/SIRPalpha) and its ligand CD47, which are members of the Ig superfamily (IgSF), have been implicated in the fusion of macrophages. We show that CD200, which is not expressed in cells that belong to the myeloid lineage, is strongly expressed in macrophages at the onset of fusion. By contrast, the CD200 receptor (CD200R), which, like CD200, belongs to the IgSF, is expressed only in cells that belong to the myeloid lineage, including osteoclasts, and in CD4+ T cells. Osteoclasts from CD200-/- mice differentiated at a reduced rate. Activation of the NF-kappaB and MAP kinase signaling pathways downstream of RANK, a receptor that plays a central role in the differentiation of osteoclasts, was depressed in these cells. A soluble recombinant protein that included the extracellular domain of CD200 rescued the fusion of CD200-/- macrophages and their activation downstream of RANK. Conversely, addition of a soluble recombinant protein that included the extracellular domain of CD200R or short-hairpin RNA-mediated silencing of the expression of CD200R prevented fusion. Thus CD200 engagement of the CD200R at the initiation of macrophage fusion regulated further differentiation to osteoclasts. Consistent with in vitro observations, CD200-/- mice contained fewer osteoclasts and accumulated more bone than CD200+/+ mice. The CD200-CD200R axis is therefore a putative regulator of bone mass, via the formation of osteoclasts.