TNF‐α and IL‐17 secreted by proinflammatory T cells (T_EFF) promote bone erosion by activating osteoclasts. We previously demonstrated that in addition to bone resorption, osteoclasts act as antigen‐presenting cells to induce FoxP3 in CD8 T cells (Tc_REG). The osteoclast‐induced regulatory CD8 T cells limit bone resorption in ovariectomized mice (a murine model of postmenopausal osteoporosis). Here we show that although low‐dose receptor activator of NF‐κB ligand (RANKL) maximally induces Tc_REG via Notch signaling pathway to limit bone resorption, high‐dose RANKL promotes bone resorption. In vitro, both TNF‐α and IL‐17, cytokines that are abundant in ovariectomized animals, suppress Tc_REG induction by osteoclasts by repressing Notch ligand expression in osteoclasts, but this effect can be counteracted by addition of RANKL. Ovariectomized mice treated with low‐dose RANKL induced Tc_REG that suppressed bone resorption, decreased T_EFF levels, and increased bone formation. High‐dose RANKL had the expected osteolytic effect. Low‐dose RANKL administration in ovariectomized mice lacking CD8 T cells was also osteolytic, confirming that Tc_REG mediate this bone anabolic effect. Our results show that although RANKL directly stimulates osteoclasts to resorb bone, it also controls the osteoclasts' ability to induce regulatory T cells, engaging an important negative feedback loop. In addition to the conceivable clinical relevance to treatment of osteoporosis, these observations have potential relevance to induction of tolerance and autoimmune diseases. © 2015 American Society for Bone and Mineral Research.