Osteoclasts (OC), specialized cells derived from monocytes, maintain skeletal homeostasis under normal conditions but degrade bone in patients with rheumatoid (RA) and psoriatic arthritis (PsA). Monocytes initially develop in the bone marrow (BM), circulate in peripheral blood, and differentiate into distinct cell types with diverse functions. Imaging studies in (RA) patients and murine arthritis models demonstrate that bone marrow edema detected on MRI is the result of enhanced myelopoiesis which precedes the development of bone erosions detected on plain radiographs several years later. A major knowledge gap, however, is whether OC develop in the BM and circulate to the joint and if the differentiation to OC takes place in the joint space in response to differentiation signals such as RANKL and TNF. We have previously demonstrated that osteoclast precursors (OCP) are increased in the circulaton of patients with RA and PsA. We showed that DC-STAMP (D endritic C ell-S pecific T r a ns m embrane p rotein), a 7-pass transmembrane protein expressed on the surface of monocytes, is essential for cell-to-cell fusion during OC differentiation and is a valid biomarker of OCP. Herein, we examined OCP in human bone marrow and identified one novel subset of DC-STAMP+ CD45 intermediate monocytes which was absent in the blood. We also found that OCPs reside in human BM with a higher frequency than in the peripheral blood. These findings support the notion that the BM is a major reservoir of circulating OCPs. In addition, we demonstrated that a higher frequency of DC-STAMP+ cells in the BM have detectable intracellular IFN-γ, IL-4 and IL-17A than DC-STAMP+ cells circulating in the peripheral blood. Finally, the frequency of DC-STAMP+ monocytes and T cells is signficantly higher in PsA BM compared to healthy controls, suggesting an enhanced myelopoiesis is a central event in inflammatory arthritis.