While their function, as immune checkpoint molecules, is well known, B7-family proteins also function as regulatory molecules in bone remodeling. B7–H3 is a receptor ligand of the B7 family that functions primarily as a negative immune checkpoint. While the regulatory function of B7–H3 in osteoblast differentiation has been established, its role in osteoclast differentiation remains unclear. Here we show that B7–H3 is highly expressed in mature osteoclasts and that B7–H3 deficiency leads to the inhibition of osteoclastogenesis in human osteoclast precursors (OCPs). High-throughput transcriptomic analyses reveal that B7–H3 inhibition upregulates IFN signaling as well as IFN-inducible genes, including IDO. Pharmacological inhibition of type-I IFN and IDO knockdown leads to reversal of B7–H3-deficiency-mediated osteoclastogenesis suppression. Although synovial-fluid macrophages from rheumatoid-arthritis patients express B7–H3, inhibition of B7–H3 does not affect their osteoclastogenesis. Thus, our findings highlight B7–H3 as a physiologic positive regulator of osteoclast differentiation and implicate type-I IFN–IDO signaling as its downstream mechanism.