Bone formation and destruction are usually tightly linked; however, in disorders such as rheumatoid arthritis, periodontal disease, and osteoporosis, elevated osteoclast activity leads to bone destruction. Osteoclast formation and activation are controlled by many signaling pathways, including p38 MAPK. Dual-specificity phosphatase 1 (DUSP-1) is a factor involved in the negative regulation of p38 MAPK. The purpose of this study was to examine the effect of Dusp1 deficiency on bone destruction. Penetrance, onset, and severity of collagen-induced arthritis were recorded in DUSP-1+/+ and DUSP-1-/- mice. Bone destruction was assessed by histologic and micro-computed tomographic examination of the joints. The in vitro formation and activation of osteoclasts from DUSP-1+/+ and DUSP-1-/- precursors were assessed in the absence or presence of tumor necrosis factor (TNF). The formation and activation of osteoclasts in vitro in the presence of TNF were enhanced by Dusp1 gene disruption. DUSP-1-/- mice exhibited higher penetrance, earlier onset, and increased severity of experimental arthritis, accompanied by greater numbers of osteoclasts in inflamed joints and more extensive loss of bone. A DUSP-1-/- mouse colony of mixed genetic background also demonstrated striking spontaneous osteolytic destruction of distal phalanges. DUSP-1 is a critical regulator of osteoclast activity and limits bone destruction in an experimental model of rheumatoid arthritis. Defects in the expression or activity of DUSP1 in humans may correlate with a propensity to develop osteolytic lesions in arthritis.