The Rac1‐specific guanosine triphosphatase (GTPase)‐activating protein Slit‐Robo GAP2 (Srgap2) is dramatically upregulated during RANKL‐induced osteoclastogenesis. Srgap2 interacts with the cell membrane to locally inhibit activity of Rac1. In this study, we determined the role of Srgap2 in the myeloid lineage on bone homeostasis and the osteoclastic response to TNFα treatment. The bone phenotype of mice specifically lacking Srgap2 in the myeloid lineage (Srgap2f/f:​LysM‐Cre;​ Srgap2 conditional knockout [cKO]) was investigated using histomorphometric analysis, in vitro cultures and Western blot analysis. Similar methods were used to determine the impact of TNFα challenge on osteoclast formation in Srgap2 cKO mice. Bone parameters in male Srgap2 cKO mice were unaffected. However, female cKO mice displayed higher trabecular bone volume due to increased osteoblast surface and bone formation rate, whereas osteoclastic parameters were unaltered. In vitro, cells from Srgap2 cKO had strongly enhanced Rac1 activation, but RANKL‐induced osteoclast formation was unaffected. In contrast, conditioned medium from Srgap2 cKO osteoclasts promoted osteoblast differentiation and had increased levels of the bone anabolic clastokine SLIT3, providing a possible mechanism for increased bone formation in vivo. Rac1 is rapidly activated by the inflammatory cytokine TNFα. Supracalvarial injection of TNFα caused an augmented osteoclastic response in Srgap2 cKO mice. In vitro, cells from Srgap2 cKO mice displayed increased osteoclast formation in response to TNFα. We conclude that Srgap2 plays a prominent role in limiting osteoclastogenesis during inflammation through Rac1, and restricts expression of the paracrine clastokine SLIT3, a positive regulator of bone formation.