Osteoclasts are bone-resorptive multinucleated cells that are differentiated from hemopoietic cell lineages of monocyte/macrophages in the presence of receptor activator of NF-κB ligand (RANKL) and M-CSF. Downstream signaling molecules of the receptor of RANKL, RANK, modulate the differentiation and the activation of osteoclasts. We recently found that histone deacetylase inhibitors (HDIs), known as anticancer agents, selectively suppressed osteoclastogenesis in vitro. However, the molecular mechanism underlying inhibitory action of HDIs in osteoclastogenesis and the effect of HDIs on pathological bone destruction are still not remained to be elucidated. In this study, we show that a depsipeptide, FR901228, inhibited osteoclast differentiation by not only suppressing RANKL-induced nuclear translocation of NFATc1 but also increasing the mRNA level of IFN-β, an inhibitor of osteoclastogenesis. The inhibition of osteoclast formation by FR901228 was abrogated by the addition of IFN-β-neutralizing Ab. In addition, treatment of adjuvant-induced arthritis in rats revealed that FR901228 inhibited not only disease development in a prophylactic model but also bone destruction in a therapeutic model. Furthermore, immunostaining of the joints of therapeutically treated rats revealed significant production of IFN-β in synovial cells. Taken together, these data suggest that a HDI inhibits osteoclastogenesis and bone destruction by a novel action to induce the expression of osteoclast inhibitory protein, IFN-β.