Morphogenesis and remodeling of bone involve synthesis of bone matrix by osteoblasts and coordinate resorption of bone by osteoclasts. Defective bone remodeling caused by altered osteoclast activity underlies a multitude of osteopenic disorders. Receptor activator of NF-kappaB (RANK) and its ligand RANKL have been identified as essential factors involved in osteoclast development and bone remodeling, but their mechanism and interacting factors have not been fully characterized. Here we report that the molecular adapter Grb-2-associated binder-2 (Gab2) associates with RANK and mediates RANK-induced activation of NF-kappaB, Akt and Jnk. Inactivation of the gene encoding Gab2 in mice results in osteopetrosis and decreased bone resorption as a result of defective osteoclast differentiation. We also show that Gab2 has a crucial role in the differentiation of human progenitor cells into osteoclasts. We have thus identified a new, key regulatory scaffold molecule, Gab2, that controls select RANK signaling pathways and is essential for osteoclastogenesis and bone homeostasis.