Development of gene transfer systems provides a key tool for understanding gene function. Exciting and often unexpected consequences from embryo manipulations are yielding insights into molecular mechanisms underlying development under normal and pathogenic states, and are providing animal models for diseases. Contributing to this progress is the elegant work on c-fos, where Wagner and coworkers identify this proto-oncogene as a primary factor which directs cell differentiation along the osteoclast/macrophage lineages, and thus regulates bone remodeling. Their studies support a link between skeletogenesis, marrow formation and hematopoiesis, and may help to delineate mechanisms underlying the oncogenic transformation of skeletal and hematopoietic cells.