Follistatin-like 1 (FSTL1) functions as a pivotal modulator of inflammation and is implicated in many inflammatory diseases such as rheumatoid arthritis. Here, we report that FSTL1 is strongly upregulated and secreted during osteoclast differentiation of bone marrow-derived macrophages (BMMs) and that FSTL1 positively regulates osteoclast formation induced by RANKL and M-CSF. The overexpression of FSTL1 or treatment with recombinant FSTL1 (rFSTL1) in BMMs enhances the formation of multinuclear osteoclasts and the induction of c-Fos and NFATc1, transcription factors important for osteoclastogenesis. Conversely, knockdown of FSTL1 using a small hairpin RNA suppresses osteoclast formation and the expression of these transcription factors. While FSTL1 does not affect RANKL-stimulated activation of p38 MAPK, phosphorylation of IκBα, JNK, and ERK were increased by overexpression or addition of rFSTL1. Furthermore, rFSTL1 increased RANKL-induced NF-κB transcriptional activity in a dose-dependent manner. In addition to its role in osteoclastogenesis, FSTL1 promotes proliferation of osteoclast precursors by increasing M-CSF-induced ERK activation, which in turn leads to accelerated osteoclast formation. Together, our findings demonstrate that FSTL1 is a secreted osteoclastogenic factor that plays a critical role in osteoclast formation via the NF-κB and MAPKs signaling pathways.