Abstract Integrin-associated protein (IAP/CD47) has been implicated in macrophage-macrophage fusion. To understand the actions of CD47 on skeletal remodeling, we compared Cd47−/− mice with Cd47+/+ controls. Cd47−/− mice weighed less and had decreased areal bone mineral density compared with controls. Cd47−/− femurs were shorter in length with thinner cortices and exhibited lower trabecular bone volume owing to decreased trabecular number and thickness. Histomorphometry revealed reduced bone-formation and mineral apposition rates, accompanied by decreased osteoblast numbers. No differences in osteoclast number were observed despite a nonsignificant but 40% decrease in eroded surface/bone surface in Cd47−/− mice. In vitro, the number of functional osteoclasts formed by differentiating Cd47−/− bone marrow cells was significantly decreased compared with wild-type cultures and was associated with a decrease in bone-resorption capacity. Furthermore, by disrupting the CD47–SHPS-1 association, we found that osteoclastogenesis was markedly impaired. Assays for markers of osteoclast maturation suggested that the defect was at the point of fusion and not differentiation and was associated with a lack of SHPS-1 phosphorylation, SHP-1 phosphatase recruitment, and subsequent dephosphorylation of non–muscle cell myosin IIA. We also demonstrated a significant decrease in osteoblastogenesis in bone marrow stromal cells derived from Cd47−/− mice. Our finding of cell-autonomous defects in Cd47−/− osteoblast and osteoclast differentiation coupled with the pronounced skeletal phenotype of Cd47−/− mice support the conclusion that CD47 plays an important role in regulating skeletal acquisition and maintenance through its actions on both bone formation and bone resorption. © 2011 American Society for Bone and Mineral Research