Beneficial effects of n‐3 fatty acids (FA) on bone mineral density (BMD) have been reported in mice, rats and human beings, but the precise mechanisms involved have not been described. This study used the Fat‐1 mouse, a transgenic model that synthesizes n‐3 FA from n‐6 FA to directly determine if outcome of bone health were correlated with n‐3 FA. Ovariectomized (Ovx) and sham operated wild‐type (WT) and Fat‐1 mice were fed an AIN‐93M diet containing 10% corn oil for 24 weeks. BMD was analysed by dual energy x‐ray absorptiometry. Fat‐1 Ovx mice exhibited significantly lower level of osteotropic factors like receptor activator of NF‐κB ligand and tartrate‐resistant acid phosphatase (TRAP)5b in serum and higher BMD in distal femoral metaphysis, proximal tibial metaphysis, femoral diaphysis and lumbar vertebra as compared to WT Ovx mice. LPS‐stimulated bone marrow (BM) cells from Fat‐1 Ovx mice produced significantly lower level of pro‐inflammatory cytokines like tumour necrosis factor‐α, interleukin (IL)‐1‐β, IL‐6 and higher level of anti‐inflammatory cytokines like IL‐10, IFN‐γ and higher level of nitric oxide as compared to BM cells from WT Ovx mice. LPS‐stimulated COX‐II activity as well as NF‐κB activation in BM cells from Fat‐1 Ovx mice was significantly less as compared to BM cells from WT Ovx mice. Furthermore, Fat‐1 BM cells generated significantly less number of TRAP osteoclast‐like cells as compared to WT BM cells. In conclusion, we offer further insight into the mechanisms involved in preventing the BMD loss in Ovx mice by n‐3 FA using a Fat‐1 transgenic mouse model.