Phenotypically different osteoclasts may be generated from different subsets of precursors. To what extent the formation of these osteoclasts is influenced or mediated by the inflammatory cytokine TNF-α, is unknown and was investigated in this study. The osteoclast precursors early blasts (CD31hiLy-6C−), myeloid blasts (CD31+Ly-6C+), and monocytes (CD31−Ly-6Chi) were sorted from mouse bone marrow using flow cytometry and cultured with M-CSF and RANKL, with or without TNF-α. Surprisingly, TNF-α prevented the differentiation of TRAcP+ osteoclasts generated from monocytes on plastic; an effect not seen with early blasts and myeloid blasts. This inhibitory effect could not be prevented by other cytokines such as IL-1β or IL-6. When monocytes were pre-cultured with M-CSF and RANKL followed by exposure to TNF-α, a stimulatory effect was found. TNF-α also stimulated monocytes’ osteoclastogenesis when the cells were seeded on bone. Gene expression analysis showed that when TNF-α was added to monocytes cultured on plastic, RANK, NFATc1, and TRAcP were significantly down-regulated while TNF-αR1 and TNF-αR2 were up-regulated. FACS analysis showed a decreased uptake of fluorescently labeled RANKL in monocyte cultures in the presence of TNF-α, indicating an altered ratio of bound-RANK/unbound-RANK. Our findings suggest a diverse role of TNF-α on monocytes’ osteoclastogenesis: it affects the RANK-signaling pathway therefore inhibits osteoclastogenesis when added at the onset of monocyte culturing. This can be prevented when monocytes were pre-cultured with M-CSF and RANKL, which ensures the binding of RANKL to RANK. This could be a mechanism to prevent unfavorable monocyte-derived osteoclast formation away from the bone.