The unpredictable behavior of giant cell tumor (GCT) parallels its controversial histogenesis. Multinucleated giant cells, stromal cells, and CD68(+) monocytes/macrophages are the three elements that interact in GCT. We compared the ability of stromal cells and normal mesenchymal stromal cells to differentiate into osteoblasts. Stromal cells and mesenchymal cells had similar proliferation rates and lifespans. Although stromal cells expressed early osteogenic markers, they were unable to differentiate into osteoblasts but they did express intracellular adhesion molecule-1, a marker of bone-lining cells. They were unable to form clones in a semisolid medium and unable to promote osteoclast differentiation, although they exerted a strong chemotactic effect on osteoclast precursors. Stromal cells may be either immature proliferating osteogenic elements or specialized osteoblast-like cells that fail to show neoplastic features but can induce the differentiation of osteoclast precursors. They might be secondarily induced to proliferate by a paracrine effect induced by monocyte-macrophages and/or giant cells. The increased number of giant cells in GCT may be secondary to an autocrine circuit mediated by the receptor activator of nuclear factor kB.