Trabecular bone maintains physiological homeostasis and consistent structure and mass through repeated cycles of bone remodeling by means of tightly localized regulation. The molecular and cellular processes that regulate localized bone remodeling are poorly understood because of a lack of relevant experimental models. A tissue-engineered model is described here that reproduces bone tissue complexity and bone remodeling processes with high fidelity and control. An osteoid-inspired biomaterial—demineralized bone paper—directs osteoblasts to deposit structural mineralized bone tissue and subsequently acquire the resting-state bone lining cell phenotype. These cells activate and shift their secretory profile to induce osteoclastogenesis in response to chemical stimulation. Quantitative spatial mapping of cellular activities in resting and activated bone surface coculture showed that the resting-state bone lining cell network actively directs localized bone remodeling by means of paracrine signaling and cell-to-cell contact. This model may facilitate further investigation of trabecular bone niche biology.