Mice homozygous for the motheaten (Hcphme) or viable motheaten (Hcphme-v) mutations are deficient in functional SHP-1 protein-tyrosine phosphatase and show severe defects in hematopoiesis. Comparison of femurs from mev/mev mice revealed significant decreases in bone mineral density (0.33 +/- 0.03 mg/mm3 for mev/mevversus 0.41 +/- 0.01 mg/mm3 for controls) and mineral content (1.97 +/- 0.36 mg for mev/mevversus 10.64 +/- 0.67 for controls) compared with littermate controls. Viable motheaten mice also showed reduced amounts of trabecular bone and decreased cortical thickness. These bone abnormalities were associated with a 14% increase in numbers of multinucleated osteoclasts and an increase in osteoclast resorption activity. In co-cultures of normal osteoblasts with mutant or control bone marrow cells, numbers of osteoclasts developing from mutant mice were increased compared with littermate control mice. Although mev/mev osteoclasts develop in the absence of colony-stimulating factor (CSF)-1, nevertheless cultured osteoclasts show increased size in the presence of CSF-1. CSF-1-deficient osteopetrosis (op/op) mutant mice develop severe osteosclerosis. However, doubly homozygous mev/mevop/op mice show an expansion of bone marrow cavities and reduced trabecular bone mass compared with op/op mice. Western blot analysis showed that several proteins that were markedly hyperphosphorylated on tyrosine residues were detected in the motheaten osteoclasts, including a novel 126-kd phosphotyrosine protein. The marked hyperphosphorylation of a 126-kd protein in motheaten osteoclasts suggests that this protein depends on SHP-1 for dephosphorylation. These findings demonstrate that the decreased SHP-1 catalytic activity in me/me and mev/mev mice results in an increased population of activated osteoclasts and consequent reduction in bone density.