Objective The mechanistic link between Janus kinase (JAK) signaling and structural damage to arthritic joints in rheumatoid arthritis (RA) is poorly understood. This study was undertaken to investigate how selective inhibition of JAK with tofacitinib (CP-690,550) affects osteoclast-mediated bone resorption in a rat adjuvant-induced arthritis (AIA) model, as well as human T lymphocyte RANKL production and human osteoclast differentiation and function. Methods Hind paw edema, inflammatory cell infiltration, and osteoclast-mediated bone resorption in rat AIA were assessed using plethysmography, histopathologic analysis, and immunohistochemistry; plasma and hind paw tissue levels of cytokines and chemokines (including RANKL) were also assessed. In vitro RANKL production by activated human T lymphocytes was evaluated by immunoassay, while human osteoclast differentiation and function were assessed via quantitative tartrate-resistant acid phosphatase staining and degradation of human bone collagen, respectively. Results Edema, inflammation, and osteoclast-mediated bone resorption in rats with AIA were dramatically reduced after 7 days of treatment with the JAK inhibitor, which correlated with reduced numbers of CD68/ED-1+, CD3+, and RANKL+ cells in the paws; interleukin-6 (transcript and protein) levels were rapidly reduced in paw tissue within 4 hours of the first dose, whereas it took 4-7 days of therapy for RANKL levels to decrease. Tofacitinib did not impact human osteoclast differentiation or function, but did decrease human T lymphocyte RANKL production in a concentration-dependent manner. Conclusion These results suggest that the JAK inhibitor tofacitinib suppresses osteoclast-mediated structural damage to arthritic joints, and this effect is secondary to decreased RANKL production.