Paget's disease of bone (PDB) is a late‐onset disorder frequently caused by mutations in the SQSTM1 gene, leading to hyperactive osteoclasts and resulting in bone pain, deformities, and fractures. However, some more severe forms of PDB—negative for SQSTM1 mutations—have been described, in which the disease degenerates into bone cancers and shows a poor prognosis. Osteosarcoma is the most frequent and aggressive tumor arising in PDB (OS/PDB), with a 5‐year survival rate almost nil, but the underlying molecular mechanism is unknown. Here, we investigated an extended pedigree with 11 individuals affected by early onset and polyostotic PDB, mainly interesting the appendicular skeleton. Interestingly, three members also developed secondary osteosarcoma. We performed exome sequencing and identified a 4‐bp deletion in the PFN1 gene, resulting in the degradation of the mutant protein. Copy number screening on 218 PDB individuals of our biobank disclosed that four of them (~2%) carry a germline heterozygous deletion of PFN1. The identification of these subjects, who exhibit a particularly severe form of disease, emphasizes the diagnostic value of this genetic screening to identify PDB individuals predisposed to develop osteosarcoma. In fact, we detected allelic imbalance at PFN1 locus also in 8 of 14 (57%) sporadic OS/PDB, further proving its causative role. in vitro experiments also confirmed PFN1 involvement in this form of PDB. Indeed, CRISPR‐Cas9‐mediated Pfn1 knockout in pre‐osteoclasts resulted into enhanced osteoclast differentiation and resorption, with the formation of large osteoclasts never described before in PDB. In addition, Pfn1 lacking pre‐osteoblasts lost their differentiation capability and failed to efficiently mineralize bone. Moreover, they acquired features of malignant transformation, including loss of focal adhesions and increased invasion ability. In conclusion, these findings disclose PFN1 haploinsufficiency as the pathological mechanism in OS/PDB.