Tumor necrosis factor receptor-associated factor 6 (TRAF6) associates with the cytoplasmic domain of receptor activator of NF-κB (RANK) and is an essential component of the signaling complex mediating osteoclastogenesis. However, the osteoclastic activity of TRAF6 is blunted by its association with four and half LIM domain 2 (FHL2), which functions as an adaptor protein in the cytoplasm and transcriptional regulator in the nucleus. We find that TRAF6 also localizes in the nuclei of osteoclasts but not their bone marrow macrophage precursors and that osteoclast intranuclear abundance is specifically increased by RANK ligand (RANKL). TRAF6 nuclear localization requires FHL2 and is diminished in fhl2-/- osteoclasts. Suggesting transcriptional activity, TRAF6 interacts with the transcription factor RUNX1 in the osteoclast nucleus. FHL2 also associates with RUNX1but does so only in the presence of TRAF6. Importantly, TRAF6 recognizes FHL2 and RUNX1 in osteoclast nuclei, and the three molecules form a DNA-binding complex that recognizes and transactivates the RUNX1 response element in the fhl2 promoter. Finally, TRAF6 and its proximal activator, RANKL, polyubiquitinate FHL2, prompting its proteasomal degradation. These observations suggest a feedback mechanism whereby TRAF6 negatively regulates osteoclast formation by intracytoplasmic sequestration of FHL2 to blunt RANK activation and as a component of a transcription complex promoting FHL2 expression.