Accumulating evidence indicates that extracellular nucleotides, signaling through P2 receptors, play a significant role in bone remodeling. Osteoclasts (the bone-resorbing cell) and osteoblasts (the bone-forming cell) display expression of the G protein-coupled P2Y(6) receptor, but the role of this receptor in modulating cell function is unclear. Here, we demonstrate that extracellular UDP, acting via P2Y(6) receptors, stimulates the formation of osteoclasts from precursor cells, while also enhancing the resorptive activity of mature osteoclasts. Furthermore, osteoclasts derived from P2Y(6) receptor-deficient (P2Y(6)R(-/-)) animals displayed defective function in vitro. Using dual energy x-ray absorptiometry scanning and microcomputed tomographic analysis we showed that P2Y(6)R(-/-) mice have increased bone mineral content, cortical bone volume, and cortical thickness in the long bones and spine, whereas trabecular bone parameters were unaffected. Histomorphometric analysis showed the perimeter of the bone occupied by osteoclasts on the endocortical and trabecular surfaces was decreased in P2Y(6)R(-/-) mice. Taken together these results show the P2Y(6) receptor may play an important role in the regulation of bone cell function in vivo.