Background: Prolactin (PRL) reduces joint inflammation, pannus formation, and bone destruction in rats with polyarticular adjuvant-induced arthritis (AIA). Here, we investigate the mechanism of PRL protection against bone loss in AIA and in monoarticular AIA (MAIA). Methods: Joint inflammation, trabecular bone loss, and osteoclastogenesis were evaluated in rats with AIA treated with PRL (via osmotic minipumps) and in mice with MAIA that were null (Prlr-/-) or not (Prlr+/+) for the PRL receptor. To help define target cells, synovial fibroblasts from Prlr+/+ mice were treated or not with proinflammatory cytokines ((Cyt), including TNFα, IL-1β, and interferon (IFN)γ) with or without PRL, and these synovial cells were co-cultured or not with bone marrow osteoclast progenitors from Prlr+/+ or Prlr-/- mice. Results: In AIA, PRL treatment reduced joint swelling, increased trabecular bone area, lowered osteoclast density, and reduced mRNA levels of osteoclast-associated genes (tartrate-resistant acid phosphatase (Trap)), cathepsin K (Ctsk), matrix metalloproteinase 9 (Mmp9), and receptor activator of nuclear factor ΚB or RANK (Tnfrsf11a)), of genes encoding cytokines with osteoclastogenic activity (Tnfa, Il1b, Il6, and receptor activator of nuclear factor ΚB ligand or RANKL (Tnfrsf11)), and of genes encoding for transcription factors and cytokines related to T helper (Th)17 cells (Rora, Rorc, Il17a, Il21, Il22) and to regulatory T cells (Foxp3, Ebi3, Il12a, Tgfb1, Il10). Prlr-/- mice with MAIA showed enhanced joint swelling, reduced trabecular bone area, increased osteoclast density, and elevated expression of Tnfa, Il1b, Il6, Trap, Tnfrsf11a, Tnfrsf11, Il17a, Il21, Il22, 1 l23, Foxp3, and Il10. The expression of the long PRL receptor form increased in arthritic joints, and in synovial membranes and cultured synovial fibroblasts treated with Cyt. PRL induced the phosphorylation/activation of signal transducer and activator of transcription-3 (STAT3) and inhibited the Cyt-induced expression of Il1b, Il6, and Tnfrsf11 in synovial fibroblast cultures. The STAT3 inhibitor S31-201 blocked inhibition of Tnfrsf11 by PRL. Finally, PRL acted on both synovial fibroblasts and osteoclast precursor cells to downregulate Cyt-induced osteoclast differentiation. Conclusion: PRL protects against osteoclastogenesis and bone loss in inflammatory arthritis by inhibiting cytokine-induced expression of RANKL in joints and synovial fibroblasts via its canonical STAT3 signaling pathway.