Apolipoprotein E (ApoE) plays a major role in the transport and metabolism of lipid. Other functions of ApoE include modulation of innate and adaptive immune responses. The expression of ApoE in osteoblasts and its relevance with bone formation have also been reported. However, the effect of ApoE on osteoclasts has not yet been examined. Here, we investigated the role of ApoE in osteoclast differentiation using bone marrow-derived macrophages (BMMs) and RAW264.7 cells. We found a down-regulation of ApoE gene expression during osteoclastic differentiation of those cells. Overexpression of ApoE in BMMs and RAW264.7 cells significantly blocked the induction of c-Fos and nuclear factor of activated T cell c1 (NFATc1), transcription factors critical for expression of osteoclast marker genes, by receptor activator of nuclear factor κB ligand (RANKL), the osteoclast differentiation factor. ApoE inhibited osteoclast differentiation, as measured by decreased number of tartrate-resistant acid phosphatase (TRAP)-positive multinuclear cells (MNCs). In addition, ApoE reduced the expression of dendritic cell-specific transmembrane protein (DC-STAMP) and ATPase, H(+) transporting, lysosomal 38kDa, V0 subunit d2 (ATP6v0d2), genes involved in cell-cell fusion during osteoclastogenesis. Knock-down of ApoE using a specific siRNA promoted the RANKL-mediated induction of osteoclast differentiation. While ApoE did not affect the activation of ERK, JNK, and p38 MAPK signaling pathways by RANKL, the phosphorylation of p65 trans-activation domain on serine 536 and transcription activity of NF-κB were reduced by ApoE overexpression. These findings suggest that ApoE plays an inhibitory role in osteoclast differentiation via the suppression of RANKL-dependent activation of NF-κB and induction of c-Fos and NFATc1.