Bone marrow macrophages (BMMs) share common progenitors with osteoclasts and are critical components of bone-tumor microenvironment; however, their function in prostate tumor growth in the skeleton has not been explored. BMMs are the major source of inflammatory factors and proteases, including cysteine protease cathepsin K (CTSK). In this study, utilizing mice deficient in CTSK, we demonstrate the critical involvement of this potent collagenase in tumor progression in bone. We present the evidence that tumor growth and progression in the bone are impaired in the absence of CTSK. Most importantly, we show for the first time that BMM-supplied CTSK may be involved in CCL2- and COX-2-driven pathways that contribute to tumor progression in bone. Together, our data unravel novel roles for CTSK in macrophage-regulated processes, and provide evidence for close interplay between inflammatory, osteolytic and tumor cell-driven events in the bone-tumor microenvironment.