Oncohistones represent compelling evidence for a causative role of epigenetic perturbations in cancer. Giant cell tumours of bone (GCTs) are characterised by a mutated histone H3.3 as the sole genetic driver present in bone-forming osteoprogenitor cells but absent from abnormally large bone-resorbing osteoclasts which represent the hallmark of these neoplasms. While these striking features imply a pathogenic interaction between mesenchymal and myelomonocytic lineages during GCT development, the underlying mechanisms remain unknown. We show that the changes in the transcriptome and epigenome in the mesenchymal cells caused by the H3.3-G34W mutation contribute to increase osteoclast recruitment in part via reduced expression of the TGF-beta-like soluble factor, SCUBE3. In turn, osteoclasts secrete unregulated amounts of SEMA4D enhancing proliferation of mutated osteoprogenitors and arresting their maturation. These findings provide a mechanism by which GCTs undergo differentiation upon denosumab treatment, a drug that depletes osteoclasts. In contrast, gain of hTERT activity, commonly found in malignant GCT, makes neoplastic cells insensitive to osteoclasts, predicting the unresponsiveness to denosumab. We provide a mechanism for GCT initiation and its response to current treatment, the basis of which is dysfunctional cross-talk between bone-forming and bone-resorbing cells, emphasising the importance of tumor/microenvironment bidirectional interactions in tumorigenesis.