Bone destruction is the major pathological process in many bone metabolic diseases and is a result of increased osteoclast formation and bone resorption. The liver X receptors (α,β), important regulators of cholesterol metabolism and inflammatory signaling, have recently been observed to play a role in both physiological and pathological bone turnover. However, the relationship between liver X receptors (LXR) and osteoclast differentiation/formation remains unknown. Here, we report that the LXR ligand GW3965 is able to clearly and potently inhibit the formation of mature osteoclasts from receptor activator of nuclear factor κB ligand (RANKL)-stimulated human and murine osteoclast precursors. This results in a significant inhibition of bone resorption. We observed that GW3965 significantly inhibited expression of the osteoclast markers tartrate-resistant acid phosphatase, cathepsin K, osteoclast-associated receptor (OSCAR), and calcitonin receptor, appearing to act in an NFATc1/p38/microphthalmia-associated transcription factor (MITF)-dependent mechanism, independently of receptor activator of nuclear factor κB or c-Fos and not directly involving the NFκB pathways. GW3965 was less effective in RAW264.7 monocyte/macrophage cells, which are more committed into the osteoclast lineage. Also, GW3965 seemed to act differently depending on the source of the progenitor cells as it had no effect on calvarial osteoclasts, compared with marrow or blood-derived monocytes. As these effects were abolished in osteoclast precursors derived from LXRβ(-/-) mice, we suggest that GW3965 acts via an LXRβ-dependent mechanism. Taken together, our results suggest that the LXR can act as an important inhibitor of RANKL-mediated osteoclast differentiation.