HMG-CoA reductase inhibitor (statin) treatment is frontline therapy for lowering plasma cholesterol levels in patients with hyperlipidemia. In a few case studies, analysis of clinical data has revealed a decreased risk of fracture in patients on statin therapy. However, this reduction in the incidence of fracture is not always observed nor is it supported by an increase in bone density, which further complicates our understanding of the role of statins in bone metabolism. Thus, the precise role of statins in bone metabolism remains poorly understood. In this study, we examined the effect of statin treatment on osteoclastogenesis. Treatment with lovastatin resulted in a significant, dose-dependent decrease in the numbers of differentiated osteoclasts and decreased cholesterol biosynthesis activity with an EC50 similar to that observed in freshly isolated rat or cultured human liver cells. Studies assessing the role of mevalonate metabolites in the development of the osteoclasts demonstrated that geranylgeraniol, but not squalene or farnesol was important for the development and differentiation of osteoclasts, implicating protein geranylgeranylation rather than protein farnesylation as a key factor in the osteoclast differentiation process. In conclusion, our data indicate that lovastatin inhibits osteoclast development through inhibition of geranylgeranylation of key prenylated proteins and that the bone effects of statins are at least partially due to their effects on osteoclast numbers.