Bone destruction is one of the most debilitating manifestations of multiple myeloma (MM) and results from the interaction of myeloma cells with the bone marrow microenvironment. Within the bone marrow, the disturbed balance between osteoclasts and osteoblasts is important for the development of lytic lesions. However, the mechanisms behind myeloma-mediated bone destruction are not completely understood. In order to address the importance of myeloma cell–osteoclast interactions in MM pathogenesis, we have developed a functional coculture system. We found that myeloma–osteoclast interactions resulted in stimulation of myeloma cell growth and osteoclastic activity through activation of major signalling pathways and upregulation of proteases. Signals from osteoclasts activated the p44/p42 MAPK, STAT3 and PI3K/Akt pathways in myeloma cells. In turn, myeloma cells triggered p38 MAPK and NF-κB signalling in osteoclasts. Myeloma–osteoclast interactions stimulated the production of TRAP, cathepsin K, matrix metalloproteinase (MMP)-1, -9, and urokinase plasminogen activator (uPA). Consistent data with myeloma cell lines and primary myeloma cells underlined the biological relevance of these findings. In conclusion, we demonstrated the critical role of myeloma cell–osteoclast interactions in the existing interdependence between tumour expansion and bone disease. The identified molecular events might provide the rationale for novel treatment strategies.