Phospholipase C γ2 (PLCγ2) is a critical regulator of innate immune cells and osteoclasts (OCs) during inflammatory arthritis. Both the catalytic domain and the adaptor motifs of PLCγ2 are required for OC formation and function. Due to the high homology between the catalytic domains of PLCγ2 and the ubiquitously expressed PLCγ1, molecules encompassing the adaptor motifs of PLCγ2 were designed to test the hypothesis that uncoupling the adaptor and catalytic functions of PLCγ2 could specifically inhibit osteoclastogenesis and bone erosion. Wild-type (WT) bone marrow macrophages (BMM) that overexpress the tandem Src homology 2 (SH2) domains of PLCγ2 (SH2(N+C)) failed to form mature OCs and resorb bone in vitro. Activation of the receptor activator of NF-κB (RANK) signaling pathway, which is critical for OC development, was impaired in cells expressing SH2(N+C). Arrest in OC differentiation was evidenced by a reduction of p38 and Iκ-Bα phosphorylation as well as decreased NFATc1 and c-Fos/c-Jun levels. Consistent with our hypothesis, SH2(N+C) abrogated formation of the RANK-Gab2 complex, which mediates NF-κB and AP-1 activation following RANK ligand (RANKL) stimulation. Furthermore, the ability of SH2(N+C) to prevent inflammatory osteolysis was examined in vivo following RANKL or LPS injections over the calvaria. Both models induced osteolysis in the control group, whereas the SH2(N+C)-treated cohort was largely protected from bone erosion. Collectively, these data indicate that inflammatory osteolysis can be abrogated by treatment with a molecule composed of the tandem SH2 domains of PLCγ2.