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Previous preclinical and clinical findings have suggested a potential role of epidermal growth factor receptor (EGFR) in osteoclast differentiation and the pathogenesis of bone metastasis in cancer. In this study, we investigated the effect of erlotinib, an orally active EGFR tyrosine kinase inhibitor (TKI), on the bone invasion of human non-small-cell lung cancer (NSCLC) cell line NCI-H292. First, we established a novel osteolytic bone invasion model of NCI-H292 cells which was made by inoculating cancer cells into the tibia of scid mice. In this model, NCI-H292 cells markedly activated osteoclasts in tibia, which resulted in osteolytic bone destruction. Erlotinib treatment suppressed osteoclast activation to the basal level through suppressing receptor activator of NF-κB ligand (RANKL) expression in osteoblast/stromal cell at the bone metastatic sites, which leads to inhibition of osteolytic bone destruction caused by NCI-H292 cells. Erlotinib inhibited the proliferation of NCI-H292 cells in in vitro. Erlotinib suppressed the production of osteolytic factors, such as parathyroid hormone-related protein (PTHrP), IL-8, IL-11 and vascular endothelial growth factor (VEGF) in NCI-H292 cells. Furthermore, erlotinib also inhibited osteoblast/stromal cell proliferation in vitro and the development of osteoclasts induced by RANKL in vitro. In conclusion, erlotinib inhibits tumor-induced osteolytic invasion in bone metastasis by suppressing osteoclast activation through inhibiting tumor growth at the bone metastatic sites, osteolytic factor production in tumor cells, osteoblast/stromal cell proliferation and osteoclast differentiation from mouse bone marrow cells.