Background: Mice deficient in the large zinc finger protein, ZAS3, show postnatal increase in bone mass suggesting that ZAS3 is critical in the regulation of bone homeostasis. Although ZAS3 has been shown to inhibit osteoblast differentiation, its role on osteoclastogenesis has not been determined. In this report we demonstrated the role of ZAS3 in bone resorption by examining the signaling mechanisms involved in osteoclastogenesis. Methodology/Principal Findings: Comparison of adult wild-type and ZAS3 knockout (ZAS3-/-) mice showed that ZAS3 deficiency led to thicker bones that are more resistant to mechanical fracture. Additionally, ZAS3-/- bones showed fewer osteoclasts and inefficient M-CSF/sRANKL-mediated osteoclastogenesis ex vivo. Utilizing RAW 264.7 pre-osteoclasts, we demonstrated that overexpression of ZAS3 promoted osteoclastogenesis and the expression of crucial osteoclastic molecules, including phospho-p38, c-Jun, NFATc1, TRAP and CTSK. Contrarily, ZAS3 silencing by siRNA inhibited osteoclastogenesis. Co-immunoprecipitation experiments demonstrated that ZAS3 associated with TRAF6, the major receptor associated molecule in RANK signaling. Furthermore, EMSA suggested that nuclear ZAS3 could regulate transcription by binding to gene regulatory elements. Conclusion/Significance: Collectively, the data suggested a novel role of ZAS3 as a positive regulator of osteoclast differentiation. ZAS3 deficiency caused increased bone mass, at least in part due to decreased osteoclast formation and bone resorption. These functions of ZAS3 were mediated via activation of multiple intracellular targets. In the cytoplasmic compartment, ZAS3 associated with TRAF6 to control NF-kB and MAP kinase signaling cascades. Nuclear ZAS3 acted as a transcriptional regulator for osteoclast-associated genes. Additionally, ZAS3 activated NFATc1 required for the integration of RANK signaling in the terminal differentiation of osteoclasts. Thus, ZAS3 was a crucial molecule in osteoclast differentiation, which might potentially serve as a target in the design of therapeutic interventions for the treatment of bone diseases related to increased osteoclast activity such as postmenopausal osteoporosis, Paget's disease, and rheumatoid arthritis.