Cyclophilin B (CyPB), encoded by PPIB, is an ER-resident peptidyl-prolyl cis-trans isomerase (PPIase) that functions independently and as a component of the collagen prolyl 3-hydroxylation complex. CyPB is proposed to be the major PPIase catalyzing the rate-limiting step in collagen folding. Mutations in PPIB cause recessively inherited osteogenesis imperfecta type IX, a moderately severe to lethal bone dysplasia. To investigate the role of CyPB in collagen folding and post-translational modifications, we generated Ppib^−/− mice that recapitulate the OI phenotype. Knock-out (KO) mice are small, with reduced femoral areal bone mineral density (aBMD), bone volume per total volume (BV/TV) and mechanical properties, as well as increased femoral brittleness. Ppib transcripts are absent in skin, fibroblasts, femora and calvarial osteoblasts, and CyPB is absent from KO osteoblasts and fibroblasts on western blots. Only residual (2–11%) collagen prolyl 3-hydroxylation is detectable in KO cells and tissues. Collagen folds more slowly in the absence of CyPB, supporting its rate-limiting role in folding. However, treatment of KO cells with cyclosporine A causes further delay in folding, indicating the potential existence of another collagen PPIase. We confirmed and extended the reported role of CyPB in supporting collagen lysyl hydroxylase (LH1) activity. Ppib^−/− fibroblast and osteoblast collagen has normal total lysyl hydroxylation, while increased collagen diglycosylation is observed. Liquid chromatography/mass spectrometry (LC/MS) analysis of bone and osteoblast type I collagen revealed site-specific alterations of helical lysine hydroxylation, in particular, significantly reduced hydroxylation of helical crosslinking residue K87. Consequently, underhydroxylated forms of di- and trivalent crosslinks are strikingly increased in KO bone, leading to increased total crosslinks and decreased helical hydroxylysine- to lysine-derived crosslink ratios. The altered crosslink pattern was associated with decreased collagen deposition into matrix in culture, altered fibril structure in tissue, and reduced bone strength. These studies demonstrate novel consequences of the indirect regulatory effect of CyPB on collagen hydroxylation, impacting collagen glycosylation, crosslinking and fibrillogenesis, which contribute to maintaining bone mechanical properties.