Inflammatory bone loss (IBL) is primarily caused by elevated osteoclast (OC) activity during chronic inflammation. However, the specific OC precursors (OCPs) responding to the inflammatory signals and the underlying mechanisms leading to IBL are poorly understood. We identified two OCP subsets: Ly6ChiCD11bhi inflammatory OCPs (iOCPs) specifically responsible for IBL, and homeostatic Ly6ChiCD11blo (hOCPs), not involved in IBL. Functional and proteomic characterization revealed that while the iOCPs are rare and display low osteoclastogenecity under normal conditions, they expand during chronic inflammation and generate OCs with enhanced activity. In contrast, the hOCPs are abundant and highly osteoclastogenic under normal conditions but are unresponsive to the inflammatory environment and generate OCs with low activity. We identified TNF-α and the S100A8/A9 proteins as key regulators, specifically controlling the iOCP response during chronic inflammation. Our findings offer iOCPs as new therapeutic targets and potential biomarkers to combat IBL in a wide range of inflammatory conditions.