An expression signature classifies chemotherapy-resistant pediatric osteosarcoma. Osteosarcoma is the most common malignant bone tumor in children. Osteosarcoma patients who respond poorly to chemotherapy are at a higher risk of relapse and adverse outcome. Therefore, it was the aim of this study to identify prognostic factors at the time of diagnosis to characterize the genes predictive of poor survival outcome and to identify potential novel therapeutic targets. Expression profiling of 30 osteosarcoma diagnostic biopsy samples, 15 with inferior necrosis following induction chemotherapy (Huvos I/II) and 15 with superior necrosis following induction chemotherapy (Huvos III/IV), was conducted using Affymetrix U95Av2 oligonucleotide microarrays. One hundred and four genes were found to be statistically significant and highly differentially expressed between Huvos I/II and III/IV patients. Statistically significant genes were validated on a small independent cohort comprised of osteosarcoma xenograft tumor samples. Markers of Huvos I/II response predominantly were gene products involved in extracellular matrix (ECM) microenvironment remodeling and osteoclast differentiation. A striking finding was the significant decrease in osteoprotegerin, an osteoclastogenesis inhibitory factor. Additional genes involved in osteoclastogenesis and bone resorption, which were statistically different, include annexin 2, SMAD, PLA2G2A, and TGFbeta1. ECM remodeling genes include desmoplakin, SPARCL1, biglycan, and PECAM. Gene expression of select genes involved in tumor progression, ECM remodeling, and osteoclastogenesis were validated via quantitative reverse transcription-PCR in an independent cohort. We propose that osteosarcoma tumor-driven changes in the bone microenvironment contribute to the chemotherapy-resistant phenotype and offer testable hypotheses to potentially enhance therapeutic response.