Background: Prolactin (PRL) reduces joint inflammation, pannus formation, and bone destruction in rats with polyarticular adjuvant-induced arthritis (AIA). Here, we investigate the mechanism of PRL protection against bone loss in AIA and in monoarticular AIA (MAIA). Methods: Joint inflammation, trabecular bone loss, and osteoclastogenesis were evaluated in rats with AIA treated with PRL (via osmotic minipumps) and in mice with MAIA that were null (Prlr-/-) or not (Prlr+/+) for the PRL receptor. To help define target cells, synovial fibroblasts from Prlr+/+ mice were treated or not with proinflammatory cytokines ((Cyt), including TNF alpha, IL-1 beta, and interferon (IFN)gamma) with or without PRL, and these synovial cells were co-cultured or not with bone marrow osteoclast progenitors from Prlr+/+ or Prlr-/- mice. Results: In AIA, PRL treatment reduced joint swelling, increased trabecular bone area, lowered osteoclast density, and reduced mRNA levels of osteoclast-associated genes (tartrate-resistant acid phosphatase (Trap)), cathepsin K (Ctsk), matrix metalloproteinase 9 (Mmp9), and receptor activator of nuclear factor kappa B or RANK (Tnfrsf11a)), of genes encoding cytokines with osteoclastogenic activity (Tnfa, Il1b, Il6, and receptor activator of nuclear factor kappa B ligand or RANKL (Tnfrsf11)), and of genes encoding for transcription factors and cytokines related to T helper (Th) 17 cells (Rora, Rorc, Il17a, Il21, Il22) and to regulatory T cells (Foxp3, Ebi3, Il12a, Tgfb1, Il10). Prlr-/- mice with MAIA showed enhanced joint swelling, reduced trabecular bone area, increased osteoclast density, and elevated expression of Tnfa, Il1b, Il6, Trap, Tnfrsf11a, Tnfrsf11, Il17a, Il21, Il22, 1 l23, Foxp3, and Il10. The expression of the long PRL receptor form increased in arthritic joints, and in synovial membranes and cultured synovial fibroblasts treated with Cyt. PRL induced the phosphorylation/activation of signal transducer and activator of transcription-3 (STAT3) and inhibited the Cyt-induced expression of Il1b, Il6, and Tnfrsf11 in synovial fibroblast cultures. The STAT3 inhibitor S31-201 blocked inhibition of Tnfrsf11 by PRL. Finally, PRL acted on both synovial fibroblasts and osteoclast precursor cells to downregulate Cyt-induced osteoclast differentiation. Conclusion: PRL protects against osteoclastogenesis and bone loss in inflammatory arthritis by inhibiting cytokine-induced expression of RANKL in joints and synovial fibroblasts via its canonical STAT3 signaling pathway.