The developmentally regulated GTP-binding protein-2 (DRG2) is a novel subclass of GTP-binding proteins. Many functional characteristics of osteoclasts (OC) are associated with small GTPases. We hypothesized that DRG2 affects bone mass via modulating OC activity. Using DRG2 transgenic mice, we investigated the role of DRG2 in bone remodeling. DRG2 overexpression caused a decrease in bone mass and an increase in the number and activity of OC in vivo. DRG2 overexpression increased fusion, spreading, survival, and resorption activity of OC in vitro. Downregulation of DRG2 by siRNA decreased fusion, spreading, and survival of OC, supporting the observations found in DRG2 transgenic OC. Transgenic mature OCs were larger, with actin rings and higher ERK, Akt, Rac1 and Rho activities than wild-type OCs. Inhibition of these proteins abolished the effects of DRG2 on formation of large OCs with actin rings, implying that DRG2 affects cytoskeleton reorganization in a Rac1/Rho/ERK/Akt-dependent manner. In summary, DRG2 is associated with survival and cytoskeleton organization of OC under influence of macrophage colony-stimulating factor, and its overexpression leads to elevated bone resorptive activity of OC, resulting in bone loss.