Metastasis represents the most devastating stage of cancer progression. In particular, bone metastasis affects more than 70% of late stage breast cancer patients. Discovering bone metastasis genes that are clinically relevant and functionally important are critical for the development of novel therapeutics for high-risk breast cancer patients. We apply a multidisciplinary approach to analyze the molecular basis of breast cancer bone metastasis, combining functional genomics tools with animal models and clinical analysis of cancer metastasis. Candidate bone metastasis genes were identified from gene expression profiling of highly bone metastatic cells derived after in vivo selection in animal models, and from human breast tumor samples with clinical associations with skeletal relapse. Functional characterization of these genes revealed their novel role in mediating tumor-stromal interactions essential for the formation of osteolytic bone metastasis. Using in vivo imaging technology, we showed that TGFβ is released from bone matrix upon bone destruction, and signals to breast cancer to further enhance their malignancy in developing bone metastasis. We furthered identified Jagged1 as a TGFβ target genes in tumor cells that engaged bone stromal cells through the activation of Notch signaling to provide a positive feedback to promote tumor growth and to activate osteoclast differentiation. Analysis of miRNAs involved in osteoclast differentiation also revealed miRNAs that can effectively serve as biomarkers and therapeutic agents for osteolytic bone metastasis. These discoveries have led to the development of novel biomarkers and therapeutic agents with the great potential for more effective clinical management of skeletal complications of breast cancer.