Abstract Osteoblasts, osteocytes, and osteoclasts (OCs) are involved in the bone production and resorption, which are crucial in bone homeostasis. OC hyperactivation plays a role in the exaggerated bone resorption of diseases such as osteoporosis, rheumatoid arthritis, and osteolytic tumor metastases. This work stems from the finding that OCs can express B7h (ICOS-Ligand), which is the ligand of the ICOS T cell costimulatory molecule. Because recent reports have shown that, in endothelial, dendritic, and tumor cells, B7h triggering modulates several activities of these cells, we analyzed the effect of B7h triggering by recombinant ICOS-Fc on OC differentiation and function. The results showed that ICOS-Fc inhibits RANKL-mediated differentiation of human monocyte-derived OC-like cells (MDOCs) by inhibiting the acquirement of the OC morphology, the CD14− cathepsin K+ phenotype, and the expression of tartrate-resistant acid phosphatase, OSCAR, NFATc1, and DC-STAMP. Moreover, ICOS-Fc induces a reversible decrease in the sizes of cells and nuclei and cathepsin K expression in mature MDOCs. Finally, ICOS-Fc inhibits the osteolytic activities of MDOCs in vitro and the development of bone loss in ovariectomized or soluble RANKL-treated mice. These findings open a novel field in the pharmacological use of agonists and antagonists of the ICOS–B7h system.