The presence of healthy muscle adjacent to fracture sites accelerates healing. It has been suggested that muscle supports the healing through secretion of myokines and by providing a source of stem cells that differentiate into osteoblasts. Our objective was to investigate the communication between muscle and bone cells in a co‐culture system under inflammatory conditions that model early stages of fracture healing. MLO‐Y4 cells were cultured in 6‐well plates and C2C12 myoblasts were seeded on inserts ﴾ThinCert™﴿. After 24hr, interleukin ﴾IL﴿‐1β ﴾10ng/mL﴿ was added and 6hr later C2C12 inserts were placed over the MLO‐Y4 cells. At 6, 24 and 48 hours of co‐culture cell lysates and conditioned media were collected. Gene expression was analysed by TaqMan® assays. Concentrations of IL6 and CCL2 were determined by BD™ Cytometric Bead Array. IL1β treatment increased expression of the inflammatory cytokines Il6 and Ccl2 in MLO‐Y4 cells by 1000‐fold, whereas in C2C12 cells 10‐fold increases were measured. The presence of MLO‐Y4 cells in co‐culture further stimulated the expression of Il6 and Ccl2 in C2C12 cells by 20‐fold and 2‐fold, respectively. Of the three differentiation markers measured in C2C12 cells, a 2‐fold inhibition in MyoG levels were found in co‐culture in comparison to separate culture, whereas MyoD and RunX2 were without change. Over the 48hr incubation in co‐culture, IL6 concentrations in conditioned media sampled from the C2C12 insert compartment increased from 0.2±0.05 to 7.2±0.4 ng/mL ﴾mean±SEM﴿, and CCL2 from 0.5±0.1 to 11.3±1.9 ng/mL, likely due to a combination of increased secretion from C2C12 and diffusion from the MLO‐Y4 compartment. Growing MLO‐Y4 and C2C12 in a co‐culture system that allows the exchange of soluble signals induced the expression of Il6 and Ccl2 in C2C12 cells, and inhibited the expression of the muscle differentiation marker MyoG.