The granulocyte–macrophage progenitor (CFU-GM) is a multipotent cell that can differentiate to osteoclasts (OCLs), macrophages, or granulocytes. However, the relative potential of CFU-GM to efficiently form OCLs is unknown. In this report we demonstrate that granulocyte–macrophage colony-forming unit (CFU-GM)-derived cells represent an easily obtainable highly purified source of human OCL precursors that form OCLs at very high efficiency (greater than 90%) when cultured with RANK ligand (RANKL), macrophage colony-stimulating factor (M-CSF), and dexamethasone. The OCLs that formed have high bone-resorbing activity and form multiple resorption lacunae per OCL on dentin slices. Similarly, murine marrow-derived CFU-GM also formed OCLs at a high efficiency (>80%) when treated with RANKL, M-CSF, and dexamethasone. In contrast, more committed macrophage colony-forming unit (CFU-M)-derived cells form few OCLs under these conditions.