Appropriate bone mass is maintained by bone-forming osteoblast and bone-resorbing osteoclasts. Mesenchymal stem cell (MSC) lineage cells control osteoclastogenesis via expression of RANKL and OPG (receptor activator of nuclear factor κB ligand and osteoprotegerin), which promote and inhibit bone resorption, respectively. Protein crosslinking enzymes transglutaminase 2 (TG2) and Factor XIII-A (FXIII-A) have been linked to activity of myeloid and MSC lineage cells; however, in vivo evidence has been lacking to support their function. In this study, we show in mice that TG2 and FXIII-A control monocyte-macrophage cell differentiation into osteoclasts as well as RANKL production in MSCs and in adipocytes. Long bones of mice lacking TG2 and FXIII-A transglutaminases, show compromised biomechanical properties and trabecular bone loss in axial and appendicular skeleton. This was caused by increased osteoclastogenesis, a cellular phenotype that persists in vitro. The increased potential of TG2 and FXIII-A deficient monocytes to form osteoclasts was reversed by chemical inhibition of TG activity, which revealed the presence of TG1 in osteoclasts and assigned different roles for the TGs as regulators of osteoclastogenesis. TG2- and FXIII-A-deficient mice had normal osteoblast activity, but increased bone marrow adipogenesis, MSCs lacking TG2 and FXIII-A showed high adipogenic potential and significantly increased RANKL expression as well as upregulated TG1 expression. Chemical inhibition of TG activity in the null cells further increased adipogenic potential and RANKL production. Altered differentiation of TG2 and FXIII-A null MSCs was associated with plasma fibronectin (FN) assembly defect in cultures and FN retention in serum and marrow in vivo instead of assembly into bone. Our findings provide new functions for TG2, FXIII-A and TG1 in bone cells and identify them as novel regulators of bone mass, plasma FN homeostasis, RANKL production and myeloid and MSC cell differentiation.