The ubiquitin‒proteasome system (UPS) plays a key role in maintaining protein homeostasis and bone remodelling. However, the role of deubiquitinating enzymes (DUBs) in bone resorption is still not well defined. Here, we identified the deubiquitinase ubiquitin C-terminal hydrolase 1 (UCHL1) as a negative regulator of osteoclastogenesis by using the GEO database, proteomic analysis, and RNAi. Osteoclast-specific UCHL1 conditional knockout mice exhibited a severe osteoporosis phenotype in an ovariectomized model. Mechanistically, UCHL1 deubiquitinated and stabilized the transcriptional coactivator with PDZ-binding motif (TAZ) at the K46 residue, thereby inhibiting osteoclastogenesis. The TAZ protein underwent K48-linked polyubiquitination, which was degraded by UCHL1. As a substrate of UCHL1, TAZ regulates NFATC1 through a nontranscriptional coactivator function by competing with calcineurin A (CNA) for binding to NFATC1, which inhibits NFATC1 dephosphorylation and nuclear transport to impede osteoclastogenesis. Moreover, overexpression of UCHL1 locally alleviated acute and chronic bone loss. These findings suggest that activating UCHL1 may serve as a novel therapeutic approach targeting bone loss in various bone pathological states.