We previously showed that mice with knockout of Cytl1, a functionally uncharacterized cytokine candidate, exhibit normal endochondral ossification and long-bone development. Here, we investigated the potential functions of CYTL1 in bone homeostasis. We found that Cytl1-/- mice exhibited higher bone mass than wild-type littermates and resisted ovariectomy-induced bone resorption. This led us to investigate the functions of CYTL1 in the osteogenesis and osteoclastogenesis of bone marrow-derived stem cells. CYTL1 was down-regulated during the osteogenesis of human mesenchymal stem cells (hMSCs). The osteogenesis of hMSCs was inhibited by overexpression or exogenous treatment of CYTL1, but enhanced by CYTL1 knockdown. CYTL1 decreased osteogenesis by inhibiting RUNX2 and promoted proliferation among undifferentiated hMSCs, but stimulated apoptosis among osteogenically differentiating cells. Finally, Cytl1-/- mice exhibited inhibition of osteoclast activity and the osteoclastogenesis of bone marrow-derived macrophages. Our results collectively suggest that CYTL1 negatively regulates the osteogenesis of MSCs and positively regulates osteoclastogenesis to modulate bone mass in mice.