Osteoblasts not only control bone formation but also support osteoclast differentiation. Here we show the involvement of Kruppel-like factor 4 (KLF4) in the differentiation of osteoclasts and osteoblasts. KLF4 was down-regulated by 1α,25-dihydroxyvitamin D3 (1,25(OH)2D3) in osteoblasts. Overexpression of KLF4 in osteoblasts attenuated 1,25(OH)2D3-induced osteoclast differentiation in co-culture of mouse bone marrow cells and osteoblasts through the down-regulation of receptor activator of nuclear factor κB ligand (RANKL) expression. Direct binding of KLF4 to the RANKL promoter repressed 1,25(OH)2D3-induced RANKL expression by preventing vitamin D receptor from binding to the RANKL promoter region. In contrast, ectopic overexpression of KLF4 in osteoblasts attenuated osteoblast differentiation and mineralization. KLF4 interacted directly with Runx2 and inhibited the expression of its target genes. Moreover, mice with conditional knockout of KLF4 in osteoblasts showed markedly increased bone mass caused by enhanced bone formation despite increased osteoclast activity. Thus, our data suggest that KLF4 controls bone homeostasis by negatively regulating both osteoclast and osteoblast differentiation.