Abnormal T cell immune responses induce aberrant expression of inflammatory cytokines such as TNF-α, leading to osteoclastmediated bone erosion and osteoporosis in autoimmune arthritis. However, the mechanism underlying enhanced osteoclastogenesis in arthritis is not completely understood. Here we show that TNF-α contributes to inflammatory bone loss by enhancing the osteoclastogenic potential of osteoclast precursor cells through inducing paired Ig-like receptor-A (PIR-A), a costimulatory receptor for receptor activator of NF-κB (RANK). In fact, bone erosion and osteoporosis, but not inflammation, caused by aberrant TNF-α expression were ameliorated in mice deficient in Fc receptor common γ subunit or β₂-microglobulin, in which the expression of PIR-As and PIR-A ligands is impaired, respectively. These results establish the pathological role of costimulatory receptors for RANK in bone loss in arthritis and may provide a molecular basis for the future therapy of inflammatory diseases.