Synovial macrophages are crucial in the development of joint inflammation and bone damage; however, the pathways that control macrophage remodeling in inflammatory M1 cells or bone-eroding osteoclasts are not fully understood. We determined that elevated IL-7R/CD127 expression is the hallmark of rheumatoid arthritis (RA) M1 macrophages and that these cells are highly responsive to interleukin-7 (IL-7)-driven osteoclastogenesis. We established that lipopolysaccharide (LPS), interferon-γ (IFNγ), and tumor necrosis factor-α (TNFα), the classic M1 macrophage mediators, enhance IL-7R expression in RA and murine macrophages. The local expression of IL-7 provokes arthritis, predominantly through escalating the number of F480+iNOS+ cells rather than CD3+ T cells. Ectopic LPS injection stabilizes IL-7-induced arthritis by increasing myeloid IL-7R expression, in part via IFNγ induction. Hence, in RAG-/- mice, IL-7-mediated arthritis is suppressed because of the reduction in myeloid IL-7R expression due to the lack of IFNγ. Moreover, the amelioration of IL-7-induced arthritis by anti-TNF therapy is due to a decrease in the number of cells in the unique F480+iNOS+IL-7R+CCL5+ subset, with no impact on the F480+Arginase+ cell or CD3+ T cell frequency. Consistent with the preclinical findings, the findings of a phase 4 study performed with RA patients following 6 months of anti-TNF therapy revealed that IL-7R expression was reduced without affecting the levels of IL-7. This study shifts the paradigm by discovering that IL-7-induced arthritis is dependent on F480+iNOS+IL-7R+CCL5+ cell function, which activates TH-1 cells to amplify myeloid IL-7R expression and disease severity.