The effect of mesenchymal stem cells (MSCs) on bone formation has been extensively demonstrated through several in vitro and in vivo studies. However, few studies addressed the effect of MSCs on osteoclastogenesis and bone resorption. Under physiological conditions, MSCs support osteoclastogenesis through producing the main osteoclastogenic cytokines, RANKL and M-CSF. However, during inflammation, MSCs suppress osteoclast formation and activity, partly via secretion of the key anti-osteoclastogenic factor, osteoprotegerin (OPG). In vitro, co-culture of MSCs with osteoclasts in the presence of high concentrations of osteoclast-inducing factors might reflect the in vivo inflammatory pathology and prompt MSCs to exert an osteoclastogenic suppressive effect. MSCs thus seem to have a dual effect, by stimulating or inhibiting osteoclastogenesis, depending on the inflammatory milieu. This effect of MSCs on osteoclast formation seems to mirror the effect of MSCs on other immune cells, and may be exploited for the therapeutic potential of MSCs in bone loss associated inflammatory diseases.