c-Src kinase is a rate-limiting activator of osteoclast (OC) function and Src inhibitors are therefore candidate antiosteoporosis drugs. By affecting alphavbeta3 and macrophage-colony stimulating factor (M-CSF)-induced signaling, c-Src is central to osteoclast activity, but not differentiation. We find Lyn, another member of Src family kinases (SFK) is, in contrast, a negative regulator of osteoclastic bone resorption. The absence of Lyn enhances receptor activator of NF-kappaB ligand (RANKL)-mediated differentiation of osteoclast precursors without affecting proliferation and survival, while its overexpression decreases osteoclast formation. In further contrast to c-Src, Lyn deficiency does not impact the activity of the mature cell. Reflecting increased osteoclast development in vitro, Lyn-/- mice undergo accelerated osteoclastogenesis and bone loss, in vivo, in response to RANKL. Mechanistically, Lyn forms a complex with receptor activator of NF-kappaB (RANK), the tyrosine phosphatase, SHP-1, and the adapter protein, Grb2-associated binder 2 (Gab2). Upon RANKL exposure, Gab2 phosphorylation, JNK, and NF-kappaB activation are enhanced in Lyn-/- osteoclasts, all critical events in osteoclast development. We therefore establish that Lyn regulates osteoclast formation and does it in a manner antithetical to that of c-Src. The most pragmatic aspect of our findings is that successful therapeutic inhibition of c-Src, in the context of the osteoclast, will require its stringent targeting.