Transglutaminase 2 (TG2) performs multiple reactions, including transamidation, and also plays a role in signal transduction as a GTP-binding protein. In this study, we reveal that TG2 controls osteoclast differentiation and bone homeostasis in mice. Osteoclasts specifically expressed the TG2 isoform among eight TG family members. Suppression in TG2 expression with siRNA led to increased osteoclast formation from primary mouse precursor cells in response to receptor activator of nuclear factor kappaB ligand (RANKL). This osteoclastogenic effect of TG2 knockdown was associated with enhanced induction of c-Fos and NFATc1 by RANKL. Moreover, TG2 knockdown up-regulated B lymphocyte-induced maturation protein 1 (Blimp1), which represses anti-osteoclastogenic genes, in a manner dependent on the NF-κB signaling pathway. To the contrary, TG2 overexpression inhibited osteoclast formation and the expression of osteoclastogenic genes. Consistent with these in vitro results, TG2 knockout mice exhibited lower trabecular bone mass and increased number of osteoclasts compared with wild-type mice. Taken together, our results provide strong evidence that TG2 plays an important role in bone metabolism by suppressing excessive osteoclastogenesis via the regulation of the NF-κB-Blimp1 signaling pathway.