Signaling by RANKL is essential for terminal differentiation of monocytes/macrophages into osteoclasts. The TRAF6 and c-Fos signaling pathways both play important roles downstream of RANKL. We show here that RANKL selectively induces NFATc1 expression via these two pathways. RANKL also evokes Ca2+ oscillations that lead to calcineurin-mediated activation of NFATc1, and therefore triggers a sustained NFATc1-dependent transcriptional program during osteoclast differentiation. We also show that NFATc1-deficient embryonic stem cells fail to differentiate into osteoclasts in response to RANKL stimulation, and that ectopic expression of NFATc1 causes precursor cells to undergo efficient differentiation without RANKL signaling. Thus, NFATc1 may represent a master switch for regulating terminal differentiation of osteoclasts, functioning downstream of RANKL.