Normal bone remodeling involves a balance between osteoclast-mediated bone resorption and osteoblast/osteocyte-mediated bone formation and is critical for maintaining healthy bone mass. This balance is often disrupted in disease conditions, such as osteoporosis and rheumatoid arthritis (RA). The mechanisms underlying bone remodeling especially in disease settings are far from well understood. DEF6 is recently identified as a novel loci associated with bone mineral density. However, it is unclear how Def6 impacts bone remodeling. We previously reported that the immunoregulator Def6 is a key inhibitor of osteoclast differentiation and bone resorption in both physiological and TNFα-mediated inflammatory conditions. In this study, we identify Def6 as a novel osteoblastic regulator that suppresses osteoblast differentiation and bone formation. Def6 deficiency enhances both osteoclastic bone resorption and osteoblastic osteogenesis. The enhanced bone resorption in Def6^-/- mice dominates, leading to osteoporosis. Mechanistically, Def6 inhibits the differentiation of both osteoclasts and osteoblasts via a common mechanism through endogenous type I IFN-mediated feedback inhibition, highlighting an immunoregulatory function of Def6 in bone cells. The presence of IFN stimulated gene (ISG) expression in osteoblast differentiation is a recent topic of interest. Our genome-wide RNAseq analysis shows expression of a group of ISGs during osteoblast differentiation and demonstrates that Def6 is a key upstream regulator of ISG expression in osteoblasts. Collectively, our results identify novel immunoregulatory function of Def6 in both osteoclastic bone resorption and osteoblastic bone formation in bone remodeling, and shed insights into the interaction between immune system and bone turn over. In TNFα-mediated inflammatory bone loss, TNFα decreases Def6 expression in osteoclasts but does not impact Def6 expression in osteoblasts. This differential regulation of Def6 expression by TNFα leads to enhanced osteoclast differentiation and reduced osteoblast differentiation, leading to drastically enhanced bone resorption with limited new bone formation in response to TNFα. These results revealed an important mechanism by which TNFα disrupts normal bone remodeling, and suggest that differential modulation of Def6 expression in different bone cells may represent novel therapeutic strategies to treat inflammatory bone loss.