This study evaluated whether transgenic expression of PTP-oc (osteoclastic transmembrane protein-tyrosine phosphatase) in cells of the osteoclast lineage would affect bone resorption and bone density in young adult mice. Transgenic mice were generated with a transgenic construct using a tartrate-resistant acid phosphatase exon 1C promoter to drive expression of rabbit PTP-oc in osteoclastic cells. pQCT evaluation of femurs of young adult male progeny of three lines showed that transgenic mice had reduced bone volume and area, cortical and trabecular bone mineral content, and density. Histomorphometric analyses at secondary spongiosa of the femur and at metaphysis of the L4 vertebra confirmed that male transgenic mice had decreased trabecular surface, reduced percentage of trabecular area, decreased trabecular number, increased trabecular separation, and increased osteoclast number per bone surface length. Consistent with an increase in bone resorption, the serum C-telopeptide level was 25% higher in transgenic mice than in wild-type littermates. However, the bone phenotype was not readily observed in female young adult transgenic mice. This could in part be due to potential interactions between estrogen and PTP-oc signaling, since the bone loss phenotype was seen in young adult ovariectomized transgenic mice by microcomputed tomography analysis. In vitro, the average pit area per resorption pit created by marrow-derived transgenic osteoclasts was ϳ50% greater than that created by wild-type osteoclasts. Transgenic osteoclasts showed a lower c-Src phosphotyrosine 527 level, greater c-Src kinase activity, and increased tyrosine phosphorylation of paxillin. In summary, this study provides compelling in vivo evidence that PTP-oc is a positive regulator of osteoclasts.