Clinically, many nail disorders accompany bone deformities, but whether the two defects are causally related is under debate. To investigate the potential interactions between the two tissue types, we analyzed epithelial-specific β-catenin deficient mice, in which nail differentiation is abrogated. These mice showed regression of not only the nail plate but also of the underlying digit bone. Characterization of these bone defects revealed active bone resorption, which is suppressed by Wnt activation in osteoblast and osteoclast precursors. Furthermore, we found that Wntless (Wls) expression, essential for Wnt ligand secretion, was lacking in the β-catenin deficient nail epithelium and that genetic deletion of Wls in the nail epithelium led to the lack of Wnt activation in osteoblast and osteoclast precursors and subsequently led to defective regression of the underlying digit bone. Together, these data show epithelial Wnt ligands can ultimately regulate Wnt signaling in osteoblasts and osteoclast precursors, known to regulate bone homeostasis. These results reveal a critical role for the nail epithelium on the digit bone during homeostatic regeneration and show that Wnt/β-catenin signaling is critical for this interaction.