Nitric oxide (NO), a mediator of cardiovascular homeostasis, neurotransmission, and immune function, has recently been found to have important effects in bone. Both constitutive and inducible forms of NO synthase are expressed by bone-derived cells, and cytokines such as interleukin-1 (IL-1), tumor necrosis factor (TNF), and interferon gamma (IFN-gamma), are potent stimulators of NO production. When combined with other cytokines, IFN-gamma markedly induces NO production, which suppresses osteoclast formation and activity of mature osteoclasts. This "superinduction" of NO is largely responsible for the selective inhibitory effect of IFN-gamma on cytokine-induced bone resorption. High concentrations of NO are also inhibitory for cells of the osteoblast lineage, and NO production appears to be partly responsible for the inhibitory effects of cytokines on osteoblast proliferation. At lower concentrations, however, NO has different effects. Moderate induction of NO potentiates bone resorption, and the constitutive production of NO at low concentrations promotes the proliferation of osteoblast-like cells and modulates osteoblast function. NO therefore appears to be an important regulatory molecule in bone with effects on cells of the osteoblast and osteoclast lineage and represents one of the molecules produced by osteoblasts which directly regulate osteoclastic activity. Stimulation of NO production in bone by proinflammatory cytokines raises the possibility that NO may be involved as a mediator of bone disease in conditions associated with cytokine activation, such as rheumatoid arthritis, tumor associated osteolysis, and postmenopausal osteoporosis.