Bone-resorbing osteoclasts play a central role in bone remodeling, which occurs throughout life. Many skeletal diseases such as osteoporosis, Paget’s disease and the lytic lesions of multiple myeloma, display excess osteoclast activity. Thus, in addition to basic biological questions, there is considerable clinical interest in the control of osteoclast differentiation and function. Previously we have demonstrated that the small GTPases Rac1 and Rac2 have specific roles in the control of hematopoietic stem cell and neutrophil functions (Gu and Filippi et al., Science 2003; Filippi et al., Nat Immunol 2004; Cancelas et al., Nat Med 2005). During these studies, we noted differences in the bone structure of Rac-deficient mice, suggesting alterations in osteoclast activity. Furthermore we found that in hematopoietic stem cells Rac proteins regulate signaling pathways that are also known to control osteoclastogenesis. In this study, we have employed a genetic approach to analyze the roles of Rac proteins in osteoclast differentiation. We utilized constitutively Rac2-null mice in combination with cre-induced deletion of floxed Rac1 sequences to effect the loss of both Rac GTPases in hematopoietic cells. Macrophages from Rac2−/− mice generated normal numbers of osteoclasts in vitro. However, the full differentiation of these cells, as assayed by emergence of differentiation markers, was perturbed. Expression the TRAP (tartrate-resistant acid phosphatase) enzyme was delayed (12 +/−3% vs. 88 +/−8%, Rac2−/− vs. wt, n= 5, p<0.001) and the expression of the β3 integrin subunit was decreased (16% vs. 76%, Rac2−/− vs. wt, n=5). The number of cells having podosomes was reduced (8 +/−3 vs. 206 +/−48 cells with podosomes/well Rac2−/− vs. wt, p<0.001). Cell fusion, which accompanies osteoclastogenesis, was also reduced. In contrast Rac1−/− macrophages produced severely reduced numbers of osteoclasts in vitro (13 +/−8/well vs. 272 +/−52 Rac1−/− vs. wt, n=2, p<0.001). Rac1−/−Rac2−/− double knock-out cells essentially developed no osteoclasts in vitro. The p44/42, JNK (jun N-terminal kinase), Akt and p38 intracellular kinase signaling pathways have all been shown to be important for osteoclastogenesis. Activation of the p44/42 and JNK (jun N-terminal kinase) pathways in response to stimulation with M-CSF (macrophage colony stimulating factor) and RANKL (receptor activator of NF-κB ligand), cytokines critically involved in osteoclast differentiation, was reduced in the Rac2−/− macrophages. When Rac1−/− cells were stimulated with M-CSF, decreased activation of the Akt and JNK pathways was observed. To study the effect of Rac deficiency on bone mass in vivo, we generated Rac1−/−Rac2−/− double knock-out mice. These mice had significantly increased bone mass (bone volume/tissue volume 0.33 +/−0.03 vs. 0.13 +/−0.02 Rac1−/−Rac2−/− vs. wild-type; p<0.001). These results indicate that 1) Rac GTPases are critical to the differentiation of macrophages into osteoclasts, 2) in the absence of Rac2 osteoclastogenesis is perturbed while inhibition of Rac1 function leads to nearly complete inhibition osteoclastogenesis, 3) specific alterations in intracellular signaling pathways are seen in Rac-deficient osteoclast precursors, and 4) inhibition of Rac function in vivo leads to an increase in bone mass.