The effects of human cystatin C on bone resorption, enzyme release, osteoclast generation, bone cell proliferation and bone matrix protein biosynthesis have been examined in different in vitro systems. The effects of cystatin C were compared with those of calcitonin and E 64 (trans‐Epoxysuccinyl‐L‐leucyl‐amido‐(4‐guanidino)butane). Recombinant human cystatin C and E 64 dose dependently inhibited the mobilization of ⁴⁵Ca and the release of ³H (from []> ³H]‐proline‐labelled bones) in mouse calvariae stimulated to resorb by parathyroid hormone (PTH) or 1,25(OH)₂‐vitamin D₃. Cystatin C and E 64 also inhibited the release of ⁴⁵Ca from bones stimulated by thrombin, interleukin‐1 and prostaglandin E₂. In PTH‐stimulated bones, the inhibitory action of cystatin C and E 64 on ⁴⁵Ca release was observed after 6–9 h, whereas the inhibitory effect on ³H release was seen after just 2 h. In contrast, calcitonin caused an inhibition of both ⁴⁵Ca and ³H release which was seen after 2 h. The PTH‐stimulated release of the lysosomal enzymes was not affected by cystatin C and E 64, whereas calcitonin caused a significant inhibition. In contrast to calcitonin, cystatin C did not affect PTH‐stimulated enhancement of osteoclast generation in the mouse calvariae. Using Western blot analysis and radioimmunoassay, we demonstrated that mouse calvarial bones and MC3T3‐E1 cells produce cystatin C. These data show that cystatin C is synthesized by bone cells and that recombinant human cystatin C inhibits bone resorption in vitro without affecting bone cell proliferation, bone matrix formation or osteoclast generation. The mechanism seems to be due primarily to inhibition of the activity of osteoclastic proteolytic enzymes released into the resorption lacunae.