Breast to bone metastasis is a common occurrence in the majority of patients with advanced breast cancer. The metastases are often incurable and are associated with bone destruction and high rates of morbidity. Understanding the underlying mechanisms of how metastatic tumor cells induce bone destruction is critically important. We previously reported that Tie2, a receptor tyrosine kinase, is significantly increased in human breast cancer tissues compared with normal and benign breast tumors and regulates tumor angiogenesis. In this study, we identify a new function of Tie2 in osteoclastogenesis and osteolytic bone invasion of breast cancer. Tie2 is present in hematopoietic stem/precursor cells. Genetic deletion of Tie2 or neutralization of Tie2 function using soluble Tie2 receptor impaired osteoclastogenesis in an embryonic stem cell differentiation assay. In contrast, deletion of Tie2 has no effect on osteoblastogenesis. As CD11b myeloid cells have the potential to become osteoclasts and Tie2 is present in a certain population of these cells, we isolated Tie2(+) and Tie2(-) myeloid cells. We observed a significant reduction of osteoclastogenesis in Tie2(-) compared with Tie2(+) CD11b cells. Consistently, neutralization of Tie2 activity in vivo significantly inhibited osteolytic bone invasion and tumor growth in a mammary tumor model, which correlated with a significant reduction of osteoclasts and tumor angiogenesis. Collectively, these data reveal a direct and novel role of Tie2 signaling in osteoclast differentiation. These findings identify Tie2 as a therapeutic target for controlling not only tumor angiogenesis but also osteolytic bone metastasis in breast cancer.