Abstract Pax5 encodes BSAP, a member of the paired box domain transcription factors, whose expression is restricted to B lymphocyte lineage cells. Pax5−/− mice have a developmental arrest of the B cell lineage at the pro-B cell stage. We show here that Pax5−/− mice are severely osteopenic, missing 60% of their bone mass. The osteopenia can be accounted for by a >100% increase in the number of osteoclasts in bone measured histomorphometrically. This is not due to a lack of B cells, because other strains of B cell-deficient mice do not exhibit this phenotype. There was no difference in the number of osteoclasts produced in vitro by wild-type and Pax5−/− bone marrow cells. In contrast, spleen cells from Pax5−/− mice produce as much as five times the number of osteoclasts as control spleen cells. Culture of Pax5−/− spleen cells yields a population of adherent cells that grow spontaneously in culture without added growth factors for >4 wk. These cells have a monocyte phenotype, produce large numbers of osteoclasts when induced in vitro, and therefore are highly enriched in osteoclast precursors. These data demonstrate a previously unsuspected connection between B cell and osteoclast development and a key role for Pax5 in the control of osteoclast development.