We compared the distribution of a cysteine proteinase inhibitor, cystatin C, with that of cathepsin K in osteoclasts of the mouse tibia by immunolight and immunoelectron microscopy. Light microscopically, strong immunoreactivity for cystatin C was found extracellularly along the resorption lacuna and intracellularly in the organelles of osteoclasts. In serial sections, various patterns of cystatin C and cathepsin K localization were seen, specifically: (1) some resorption lacuna were positive for both cystatin C and cathepsin K; (2) others were positive for either cystatin C or cathepsin K, but not both; and (3) some lacuna were negative for both. In osteoclasts, the localization of cystatin C was similar to that of cathepsin K. Furthermore, cystatin C immunoreactivity was detected in preosteoclasts and osteoblasts, whereas cathepsin K was seen only in preosteoclasts. Electron microscopically, cystatin C immunoreactive products were found in the rough endoplasmic reticulum (ER), Golgi apparatus, vesicles, granules, and vacuoles of osteoclasts. These cystatin C-positive vesicles had fused or were in the process of fusion with the ampullar vacuoles (extracellular spaces) containing cystatin C-positive, fragmented, fibril-like structures. The extracellular cystatin C was deposited on and between the cytoplasmic processes of ruffled borders, and on and between type I collagen fibrils. In the basolateral region of osteoclasts, cystatin C-positive vesicles and granules also fused with vacuoles that contained cystatin C-positive or negative fibril-like structures. These results indicate that osteoclasts not only synthesize and secrete cathepsin K from the ruffled border into the bone resorption lacunae, but also a cysteine proteinase inhibitor, cystatin C. Therefore, it is suggested that cystatin C regulates the degradation of bone matrix by cathepsin K, both extracellularly and intracellularly.