Background: Dendritic cells (DCs) are highly specialized cells, which capture antigen in peripheral tissues and migrate to lymph nodes, where they dynamically interact with and activate T cells. Both migration and formation of DC-T cell contacts depend on cytoskeleton plasticity. However, the molecular bases governing these events have not been completely defined. Methodology/Principal Findings: Utilizing a T cell-dependent model of arthritis, we find that PLCγ22/2 mice are protected from local inflammation and bone erosion. PLCγ2 controls actin remodeling in dendritic cells, thereby affecting their capacity to prime T cells. DCs from PLCγ-/- mice mature normally, however they lack podosomes, typical actin structures of motile cells. Absence of PLCγ2 impacts both DC trafficking to the lymph nodes and migration towards CCL21. The interaction with T cells is also affected by PLCγ2 deficiency. Mechanistically, PLCγ2 is activated by CCL21 and modulates Rac activation. Rac1/2-/- DCs also lack podosomes and do not respond to CCL21. Finally, antigen pulsed PLCγ2-/- DCs fail to promote T cell activation and induce inflammation in vivo when injected into WT mice. Conversely, injection of WT DCs into PLCγ2-/- mice rescues the inflammatory response but not focal osteolysis, confirming the importance of PLCγ2 both in immune and bone systems. Conclusions/Significance: This study demonstrates a critical role for PLCγ2 in eliciting inflammatory responses by regulating actin dynamics in DCs and positions the PLCγ2 pathway as a common orchestrator of bone and immune cell functions during arthritis.