Maintenance of bone mass and integrity requires a tight balance between resorption by osteoclasts and formation by osteoblasts. Exocytosis of functional proteins is a prerequisite for the activity of both cells. In the present study, we show that synaptotagmin VII, a calcium sensor protein that regulates exocytosis, is associated with lysosomes in osteoclasts and bone matrix protein-containing vesicles in osteoblasts. Absence of synaptotagmin VII inhibits cathepsin K secretion and formation of the ruffled border in osteoclasts and bone matrix protein deposition in osteoblasts, without affecting the differentiation of either cell. Reflecting these in vitro findings, synaptotagmin VII-deficient mice are osteopenic due to impaired bone resorption and formation. Therefore, synaptotagmin VII plays an important role in bone remodeling and homeostasis by modulating secretory pathways functionally important in osteoclasts and osteoblasts.