Skeletal integrity is tightly regulated by the activity of osteoblasts and osteoclasts that are both under the control of extracellular glycosaminoglycans (GAGs) through their interactions with endogenous growth factors and differentiation‐promoting ligands. Receptor activator of NF‐kappa‐B ligand (RANKL), which is a tumor necrosis factor (TNF)‐related protein that is critical for osteoclast formation, is produced by osteoblasts and further modulated by certain types of GAGs. Using unfractionated osteoblast‐derived GAGs that reflect the complex tissue microenvironment within which osteoclasts reside, we demonstrate that these GAGs block the osteoclastogenic activity of RANKL. Furthermore, RANKL significantly reduces extracellular signal‐regulated protein kinase (ERK) activity, a putative suppressor of osteoclastogenesis, but osteoblast‐derived GAGs eliminate the inhibitory effects of RANKL on ERK activity. Notably, while imposing an anti‐osteoclastic effect, these GAGs also enhanced the proliferation of osteoblasts. Thus, the osteoblast microenvironment is a potent source of GAGs that promote bone anabolic activities. The anti‐osteoclastogenic and osteoblast‐related mitogenic activities of these GAGs together may provide a key starting point for the development of selective sugar‐based therapeutic compounds for the treatment of osteopenic disorders. J. Cell. Biochem. 109: 1222–1231, 2010. © 2010 Wiley‐Liss, Inc.