Osteoclasts are multinucleated cells that originate from the fusion of mononuclear precursors and are responsible for bone resorption. Indirect evidence from in vitro studies suggests that IFN-gamma and TNF-alpha inhibit and stimulate bone resorption, respectively, but contradictory results have emerged from the literature regarding the effects of IFN-gamma on macrophage multinucleation. Using highly sensitive model systems, the present work demonstrates that, in mice, rMuIFN-gamma inhibits the fusion of alveolar macrophages in vitro but augments the number of osteoclastlike cells on implanted syngeneic bone particles in vivo. Although rMuTNF-alpha fails to stimulate macrophage multinucleation in either system, treatment of implanted animals with rMuIFN-gamma appears to limit the inflammatory reaction and favor tissue repair.