Bacterial-induced bone diseases, such as periodontitis and osteomyelitis, are chronic inflammatory diseases characterized by increased bone destruction as a result of enhanced osteoclastogenesis. The LXRα and -β are important modulators of inflammatory signaling and can potently inhibit RANKL-induced osteoclast differentiation. Here, we investigated the effects of the LXR agonist GW3965 on LPS-induced osteoclast differentiation. Mouse BMMs primed with RANKL for 24 h, then exposed to LPS in the presence of GW3965 for 4 days, formed significantly fewer and smaller TRAP(+)-multinucleated osteoclasts with reduced expression of osteoclast markers (Acp5, Ctsk, Mmp-9, Dc-stamp, and Itgβ3), along with inhibition of actin ring development. GW3965 was able to repress proinflammatory cytokine (TNF-α, IL-1β, IL-6, and IL-12p40) expression in BMMs exposed to LPS alone; however, once BMMs entered the osteoclast lineage following RANKL priming, GW3965 no longer inhibited cytokine expression. The inhibitory action of GW3965 involved the Akt pathway but seemed to be independent of MAPKs (p38, ERK, JNK) and NF-κB signaling. GW3965 acted in a LXRβ-dependent mechanism, as osteoclast differentiation was not inhibited in BMMs derived from LXRβ-/- mice. Finally, activation of LXR also inhibited differentiation in LPS-exposed mouse RAW264.7 cells. In conclusion, GW3965 acts through LXRβ to potently inhibit osteoclast differentiation from RANKL-primed BMMs in a LPS environment. In this respect, activation of the LXR could have a beneficial, therapeutic effect in the prevention of bacterial-induced bone erosion.