Bone homeostasis is maintained as a delicate balance between bone-resorption and bone-formation, which are coupled to maintain appropriate bone mass. A critical question is how bone-resorption is terminated to allow bone-formation to occur. Here, we show that TGFβs inhibit osteoclastogenesis and maintain bone-mass through Smad4 activity in osteoclasts. We found that latent-TGFβ1 was activated by osteoclasts to inhibit osteoclastogenesis. Osteoclast-specific Smad4 conditional knockout mice (Smad4-cKO) exhibited significantly reduced bone-mass and elevated osteoclast formation relative to controls. TGFβ1-activation induced expression of Irf8 and Bcl6, both of which encode factors inhibiting osteoclastogenesis, by blocking their negative regulator, Prdm1, in osteoclasts in a Smad4-dependent manner. Reduced bone-mass and accelerated osteoclastogenesis seen in Smad4-cKO were abrogated by Prdm1 deletion. Administration of latent-TGFβ1-Fc to wild-type mice antagonized LPS-induced bone destruction in a model of activated osteoclast-mediated bone destruction. Thus, latent-TGFβ1-Fc could serve as a promising new therapeutic agent in bone diseases marked by excessive resorption.