Through a process called perilacunar remodeling, bone-embedded osteocytes dynamically resorb and replace the surrounding perilacunar bone matrix to maintain mineral homeostasis. The vital canalicular networks required for osteocyte nourishment and communication, as well as the exquisitely organized bone extracellular matrix, also depend upon perilacunar remodeling. Nonetheless, many questions remain about the regulation of perilacunar remodeling and its role in skeletal disease. Here, we find that suppression of osteocyte-driven perilacunar remodeling, a fundamental cellular mechanism, plays a critical role in the glucocorticoid-induced osteonecrosis. In glucocorticoid-treated mice, we find that glucocorticoids coordinately suppress expression of several proteases required for perilacunar remodeling while causing degeneration of the osteocyte lacunocanalicular network, collagen disorganization, and matrix hypermineralization; all of which are apparent in human osteonecrotic lesions. Thus, osteocyte-mediated perilacunar remodeling maintains bone homeostasis, is dysregulated in skeletal disease, and may represent an attractive therapeutic target for the treatment of osteonecrosis.