Osteolytic bone disease is a frequent complication of multiple myeloma, resulting in skeletal complications that are a significant cause of morbidity and mortality. It is the result of increased activity of osteoclasts that is not followed by reactive bone formation by osteoblasts. Recent studies have revealed novel molecules and pathways that are implicated in osteoclast activation and osteoblast inhibition, including the RANKL/osteoprotegerin pathway, macrophage inflammatory proteins and the wingless type signaling pathway. These molecules also appear to interfere with tumor growth and survival, providing possible targets for the development of novel drugs for the management of lytic disease in myeloma. Currently, bisphosphonates are the mainstay of treatment for myeloma bone disease, although several novel agents appear promising. This review focuses on recent advances in understanding the biology of bone disease in multiple myeloma, diagnosis and recent progress in treatment options.