Objective. CD97, a member of the 7-trans-membrane epidermal growth factor family of adhesion G protein-coupled receptors, is expressed on various cell types. This study was undertaken to elucidate the functions of CD97 in bone and inflammation in an experimental mouse model, by examining the effect of CD97 on osteoclastogenesis in vitro, characterizing the skeletal phenotype of CD97-deficient (CD97-knockout [KO]) mice, and assessing the responses to tumor necrosis factor (TNF) treatment. Methods. Femoral tissue and bone marrow (BM)-derived cells from CD97-KO and wild-type (WT) mice were assessed using histomorphometric analyses, in vitro cultures, and reverse transcription-polymerase chain reaction. Serum cytokine and chemokine levels in the presence or absence of TNF challenge were analyzed by multiplex assay. Results. In cultures of mouse BM-derived macrophages in vitro, RANKL induced the expression of CD97. In vivo, the trabecular bone volume of the femurs of female CD97-KO mice was increased, and this was associated with a decrease in the number of osteoclasts. Compared to WT mice, CD97-KO mice had a reduced potential to form osteoclast-like cells in vitro. Furthermore, TNF treatment augmented the formation of osteoclasts in the calvaria of CD97-KO mice in vivo, by increasing the production of RANKL and other cytokines and chemokines and by reducing the production of osteoprotegerin by calvarial cells. Conclusion. These findings demonstrate that CD97 is a positive regulator of osteoclast-like cell differentiation, a mechanism that influences bone homeostasis. However, the presence of CD97 may be essential to suppress the initial osteoclastogenesis that occurs in response to acute and local inflammatory stimuli.