Melphalan is a cytotoxic chemotherapy used to treat patients with multiple myeloma (MM). Bone resorption by osteoclasts, by remodeling the bone surface, can reactivate dormant MM cells held in the endosteal niche to promote tumor development. Dormant MM cells can be reactivated after melphalan treatment; however, it is unclear whether melphalan treatment increases osteoclast formation to modify the endosteal niche. Melphalan treatment of mice for 14 days decreased bone volume and the endosteal bone surface, and this was associated with increases in osteoclast numbers. Bone marrow cells (BMC) from melphalan-treated mice formed more osteoclasts than BMCs from vehicle-treated mice, suggesting that osteoclast progenitors were increased. Melphalan also increased osteoclast formation in BMCs and RAW264.7 cells in vitro, which was prevented with the cell stress response (CSR) inhibitor KNK437. Melphalan also increased expression of the osteoclast regulator the microphthalmia-associated transcription factor (MITF), but not nuclear factor of activated T cells 1 (NFATc1). Melphalan increased expression of MITF-dependent cell fusion factors, dendritic cell-specific transmembrane protein (Dc-stamp) and osteoclast-stimulatory transmembrane protein (Oc-stamp) and increased cell fusion. Expression of osteoclast stimulator receptor activator of NFκB ligand (RANKL) was unaffected by melphalan treatment. These data suggest that melphalan stimulates osteoclast formation by increasing osteoclast progenitor recruitment and differentiation in a CSR-dependent manner. Melphalan-induced osteoclast formation is associated with bone loss and reduced endosteal bone surface. As well as affecting bone structure this may contribute to dormant tumor cell activation, which has implications for how melphalan is used to treat patients with MM.