Lipopolysaccharide (LPS), the principal component of Gram-negative bacterial cell walls, is a stimulator of osteoclastogenesis and thus a key factor in inflammatory bone loss. We have recently reported that the important cholesterol and inflammatory regulator, liver X receptor (LXR alpha/beta), can potently inhibit osteoclast formation from bone marrow-derived osteoclast precursors in a bacterial/LPS environment. In this manuscript, we further studied the effect of the LXR agonist GW3965 on osteoclast differentiation in RAW264.7 promyelocytic leukemia cells exposed to LPS. We found that not only did activation of the LXR potently inhibit the formation of TRAP-positive osteoclast-like cells, but promoted a population of TRAP-negative mononuclear cells with high phagocytic activity. We observed reduced expression of the osteoclast markers TRAP/Acp5, Ctsk, Calcr and Oscar after 3-4 days of GW3965 treatment, coinciding with an increase in the expression of the anti-osteoclastogenic factor Irf8. Expression of the macrophage/phagocytic marker Cd68 was increased, however the "classical" macrophage markers F4/80 and Cd14 and the "alternatively" activated macrophage markers Tgf beta and Il10 were not altered. Further, activation of LXR increased the expression of the macrophage survival gene AIM/SP alpha, a known LXR target gene, and osteoclast/macrophage-related markers (Mitf, Pu.1, Usf1/2, Ostm1 and Mfr). Although Akt phosphorylation was reduced, GW3965 seemed to act independently of MAPKs (p38, ERK, JNK) and NF kappa B, and had no inhibitory effect on cytokine expression (Tnf alpha, Il6, or Il1 beta). Our results indicate that activation of the LXR not only inhibits the differentiation of osteoclast-like cells from RAW264.7 cells in a bacterial/LPS environment, but is also involved in the fate determination of myeloid progenitor cells into macrophages with high phagocytic capacity. (C) 2012 Elsevier Inc. All rights reserved.