Protein inhibitor of activated STAT3 (PIAS3) has been shown to regulate the activity of various transcription factors. In this study, we show that the overexpression of PIAS3 in bone marrow-derived monocyte/macrophage lineage cells attenuates osteoclast formation and down-regulates the expression of NFATc1 and osteoclast-associated receptor (OSCAR), which are important modulators in osteoclastogenesis. PIAS3 has been shown to associate with histone deacetylase 1 as well as with transcription factors, including the microphthalmia transcription factor, NFATc1, and c-Fos. Moreover, overexpression of PIAS3 inhibits the transactivation of target genes such as NFATc1 and OSCAR. This inhibitory effect of PIAS3 is possibly mediated by histone deacetylase 1 recruitment to the promoter regions of NFATc1 and OSCAR. Furthermore, silencing of PIAS3 by RNA interference in osteoclast precursors enhances osteoclast formation as well as gene expression of NFATc1 and OSCAR. Taken together, our results reveal that PIAS3 acts as a modulator in osteoclastogenesis.