Ca(2+) signaling is essential for bone homeostasis and skeletal development. Here, we show that the transient receptor potential canonical 1 (TRPC1) channel and the inhibitor of MyoD family, I-mfa, function antagonistically in the regulation of osteoclastogenesis. I-mfa null mice have an osteopenic phenotype characterized by increased osteoclast numbers and surface, which are normalized in mice lacking both Trpc1 and I-mfa. In vitro differentiation of pre-osteoclasts derived from I-mfa-deficient mice leads to an increased number of mature osteoclasts and higher bone resorption per osteoclast. These parameters return to normal levels in osteoclasts derived from double mutant mice. Consistently, whole cell currents activated in response to the depletion of intracellular Ca(2+) stores are larger in pre-osteoclasts derived from I-mfa knock-out mice compared with currents in wild type mice and normalized in cells derived from double mutant mice, suggesting a cell-autonomous effect of I-mfa on TRPC1 in these cells. A new splice variant of TRPC1 (TRPC1ε) was identified in early pre-osteoclasts. Heterologous expression of TRPC1ε in HEK293 cells revealed that it is unique among all known TRPC1 isoforms in its ability to amplify the activity of the Ca(2+) release-activated Ca(2+) (CRAC) channel, mediating store-operated currents. TRPC1ε physically interacts with Orai1, the pore-forming subunit of the CRAC channel, and I-mfa is recruited to the TRPC1ε-Orai1 complex through TRPC1ε suppressing CRAC channel activity. We propose that the positive and negative modulation of the CRAC channel by TRPC1ε and I-mfa, respectively, fine-tunes the dynamic range of the CRAC channel regulating osteoclastogenesis.