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. This study describes a multifunctional role of TNF‐α on osteoclastogenesis of a particular subset of osteoclast precursors, the monocytes. TNF‐α proved to prevent osteoclast formation by monocytes when cultured on plastic, while stimulated osteoclastogenesis when the cells were first exposed to M‐CSF and RANKL followed by addition of TNF‐α, or when monocytes were seeded on bone. It is meaningful in modulating osteoclastogenesis in both physiological and inflammatory conditions.