The differentiation and activity of bone-resorbing osteoclasts are tightly regulated to maintain the homeostasis of healthy bones. In this study, the role of protein tyrosine phosphatase 1B (PTP1B) during osteoclastogenesis was studied in myeloid-specific Ptpn1-deficient (conditional knockout [cKO]) mice. The mRNA and protein expression of PTP1B increased during the formation of mature osteoclasts from mouse bone macrophages on stimulation with macrophage-colony stimulating factor (M-CSF) and receptor activator of nuclear factor κB ligand (RANKL). The Ptpn1 cKO mice exhibited increased femoral trabecular bone volume with a decreased number and activity of osteoclasts compared with control mice. The in vitro culture of osteoclast precursors corroborated the inhibition of osteoclastogenesis in cKO cells compared with control, with concomitantly decreased RANKL-dependent proliferation, lower osteoclast marker gene expression, reduced nuclear expression of nuclear factor of activated T cells cytoplasmic 1 (NFATc1), diminished intracellular Ca²⁺ oscillations, and increased phosphorylation of proto-oncogene tyrosine-protein kinase Src on inhibitory tyrosine residue. In a ligature-induced periodontitis model, Ptpn1 cKO mice exhibited attenuated osteoclastogenesis and alveolar bone loss following the induction of inflammation. The Ptpn1-deficient mice were similarly protected from ovariectomy-induced bone loss compared with control mice. These results provide a novel regulatory role of PTP1B in osteoclastogenesis and suggest a potential as a therapeutic target for bone-lytic diseases.