Osteopetrosis is a bone modeling disorder resulting in excessive accumulation of bone matrix due to defective function of osteoclasts, the cells that resorb bone. Mice carrying a targeted disruption of the gene Src that encodes pp60c-src (Src), a nonreceptor protein tyrosine kinase, develop this phenotype but do not exhibit other overt defects despite the fact that the kinase is normally present in a broad variety of cell types. Because Src is expressed in osteoblasts as well as in osteoclasts and both are required for normal bone resorption, the basic defect could occur in either cell type. In this study we have used in vitro approaches and fetal liver transplantation into irradiated Src- recipients to demonstrate that the inherent defect is with osteoclasts and autonomous of the bone marrow microenvironment. This result (i) identifies a cell type in which Src function is essential and cannot be replaced by other related kinases and (ii) should allow the isolation of a substrate that is specific to Src.