We have osb particle board subfloor, w/ a 3/8ths inch plywood underlayment underneath ceramic tile. Our grout is cracking everywhere, and tiles are loosening. The underlayment was stapled to the particle board subfloor. I know this was improper. We were also told that tile should never be put over osb-is this true. To have it repaired do we need to take up the tile, undrlayment AND the osb?

Here's the link to an excellent article on OSB vs. plywood:
http://www.umass.edu/bmatwt/osb.html

While it addresses the problems with tile on OSB (OSB swells and cracks the grout), it may not tell you conclusively if you need to replace the OSB.

I'd say you'll have to get rid of one or the other.

Sorry to say pal, but the flooring has to go. OSB is not a flooring material as it does not have the same properties as plywood. OSB is a weak wood as it expands more and holds moisture more that plywood. You will need to remove the entire floor with acception to the original 5/8 plywood (assuming that it is still ok). Also, if you plan to replace the flooring with new tiles, ensure that your subfloor is minimal 1 1/8" thick ( some will say 1 1/4"), so an additional sheet or 1/2 plywood on your already existing 5/8. Remember to stagger the joints of the 2 sheets to give better strength and use lots of screws......not staples....seriously....Tons OF Screws...
I hope this helps.
P.S. The number one rule to installing tiles are to have a very strong and sound subfloor.