Regulators of G protein signaling (Rgs) have pivotal roles in controlling various cellular processes, such as cell differentiation. How Rgs proteins regulate osteoclast (OC) differentiation, function and bone homeostasis is poorly understood. It was previously demonstrated that Rgs12, the largest protein in the Rgs family, is predominantly expressed in OCs and regulates OC differentiation in vitro. To further understand the role and mechanism of Rgs12 in OC differentiation and bone diseases in vivo, we created OC-targeted Rgs12 knockout mice by using inducible Mx1-Cre and CD11b-Cre. Deletion of Rgs12 in hematopoietic cells or specifically in OC precursors resulted in increased bone mass with decreased OC numbers. Loss of Rgs12 impaired OC differentiation and function with impaired Ca(2+) oscillations and reduced nuclear factor of activated T cells (NFAT) 2 expression. The introduction of wild-type osteoblasts did not rescue the defective osteoclastogenesis. Ectopic expression of NFAT2 rescued defective OC differentiation in CD11b;Rgs12(fl/fl) cells and promoted normal OC differentiation. Moreover, deletion of Rgs12 significantly inhibited pathological osteoclastogenesis and bone destruction in Rgs12-deficient mice that were subjected to ovariectomy and lipodysaccharide for bone loss. Thus our findings demonstrate that Rgs12 is an important regulator in OC differentiation and function and identify Rgs12 as a potential therapeutic target for osteoporosis and inflammation-induced bone loss.