Osteoimmunology arose from the recognition that cytokines produced by lymphocytes can affect bone homeostasis. We have previously shown that osteoclasts, cells that resorb bone, act as APCs. Cross-presentation of Ags by osteoclasts leads to expression of CD25 and Foxp3, markers of regulatory T cells in the CD8 T cells. Octeoclast-induced Foxp3(+) CD25(+) regulatory CD8 T cells (OC-iTcREG) suppress priming of CD4 and CD8 T cells by dendritic cells. OC-iTcREG also limit bone resorption by osteoclasts, forming a negative feedback loop. In this study, we show that OC-iTcREG express concurrently T-bet and Eomesodermin (Eomes) and IFN-γ. Pharmacological inhibition of IκK blocked IFN-γ, T-bet, and Eomes production by TcREG Furthermore, we show, using chromatin immunoprecipitation, NF-κB enrichment in the T-bet and Eomes promoters. We demonstrate that IFN-γ produced by TcREG is required for suppression of osteoclastogenesis and for degradation of TNFR-associated factor 6 in osteoclast precursors. The latter prevents signaling by receptor activator of NF-κB ligand needed for osteoclastogenesis. Knockout of IFN-γ rendered TcREG inefficient in preventing actin ring formation in osteoclasts, a process required for bone resorption. TcREG generated in vivo using IFN-γ(-/-) T cells had impaired ability to protect mice from bone resorption and bone loss in response to high-dose receptor activator of NF-κB ligand. The results of this study demonstrate a novel link between NF-κB signaling and induction of IFN-γ in TcREG and establish an important role for IFN-γ in TcREG-mediated protection from bone loss.