Decoy receptor 3 (DcR3), a soluble receptor for FasL, LIGHT, and TL1A, induces osteoclast formation from monocyte, macrophage, and bone stromal marrow cells. However, the function of DcR3 on bone formation remains largely unknown. To understand the function of DcR3 in bone formation in vivo, transgenic mice overexpressing DcR3 were generated. Bone mineral density (BMD) and bone mineral content (BMC) of total body were significantly lower in DcR3 transgenic mice as compared with wild-type controls. The difference in BMD and BMC between DcR3 transgenic and control mice was confirmed by histomorphometric analysis, which showed a 35.7% decrease in trabecular bone volume in DcR3 transgenic mice in comparison with wild-type controls. The number of osteoclasts increased in DcR3 transgenic mice. In addition, local administration of DcR3 (30 microg/ml, 10 microl, once/day) into the metaphysis of the tibia via the implantation of a needle cannula significantly decreased the BMD, BMC, and bone volume of secondary spongiosa in tibia. Local injection of DcR3 also increased osteoclast numbers around trabecular bone in tibia. Furthermore, coadminstration of soluble tumor necrosis factor receptor inhibitor/Fc chimera (TNFRSF1A) but not osteoprotegerin inhibited the action of DcR3. In addition, in an assay of osteoclast activity on substrate plates, DcR3 significantly increased the resorption activity of mature osteoclasts. Treatment with higher concentrations of DcR3 slightly increased nodule formation and alkaline phosphatase activity of primary cultured osteoblasts. These results indicate that DcR3 may play an important role in osteoporosis or other bone diseases.