Bone metabolism is a vital process that involves resorption by osteoclasts and formation by osteoblasts, which is closely regulated by immune cells. The neuronal guidance protein Netrin‐1 regulates immune cell migration and inflammatory reactions, but its role in bone metabolism is unknown. During osteoclast differentiation, osteoclast precursors increase expression of Netrin‐1 and its receptor Unc5b. Netrin‐1 binds, in an autocrine and paracrine manner, to Unc5b to promote osteoclast differentiation in vitro, and absence of Netrin‐1 or antibody‐mediated blockade of Netrin‐1 or Unc5b prevents osteoclast differentiation of both murine and human precursors. We confirmed the functional relationship of Netrin‐1 in osteoclast differentiation in vivo using Netrin‐1‐deficient (Ntn1^‐/‐) or wild‐type (WT) bone marrow transplanted mice. Notably, Ntn1^‐/‐ chimeras have markedly diminished osteoclasts, as well as increased cortical and trabecular bone density and volume compared with WT mice. Mechanistic studies revealed that Netrin‐1 regulates osteoclast differentiation by altering cytoskeletal assembly. Netrin‐1 increases regulator of Rho‐GEF subfamily (LARG) and repulsive guidance molecule (RGMa) association with Unc5b, which increases expression and activation of cytoskeletal regulators RhoA and focal adhesion kinase (FAK). Netrin‐1 and its receptor Unc5b likely play a role in fusion of osteoclast precursors because Netrin‐1 and DC‐STAMP are tightly linked. These results identify Netrin‐1 as a key regulator of osteoclast differentiation that may be a new target for bone therapies. © 2015 American Society for Bone and Mineral Research.