Recent evidence indicates that the decoy receptor 3 (DcR3) of the TNF receptor superfamily, which initially though prevents cytokine responses of FasL, LIGHT and TL1A by binding and neutralization, can modulate monocyte function through reverse signaling. We show in this work that DcR3 can induce osteoclast formation from human monocytes, murine RAW264.7 macrophages, and bone marrow cells. DcR3-differentiated cells exhibit characteristics unique for osteoclasts, including polynuclear giant morphology, bone resorption, TRAP, CD51/61, and MMP-9 expression. Consistent with the abrogation of osteoclastogenic effect of DcR3 by TNFR-Fc, DcR3 treatment can induce osteoclastogenic cytokine TNF-α release through ERK and p38 MAPK signaling pathways. We conclude that DcR3 via coupling reverse signaling of ERK and p38 MAPK and stimulating TNF-α synthesis is a critical regulator of osteoclast formation. This action of DcR3 might play an important role in significant osteoclastic activity in osteolytic bone metastases.