Members of the Leprecan family of proteins include enzymes, prolyl 3-hydroxylase 1 (P3h1), P3h2 and P3h3, and non-enzymatic proteins, Crtap and Sc65. Mutations in CRTAP and LEPRE1 (encoding P3H1) have been associated with human disease such as recessive osteogenesis imperfecta, however, the function of Sc65 which is closely related and highly homologous to Crtap is unknown. Sc65 has been described as a synaptonemal complex protein, a nucleolar protein, and a cytoplasmic adapter protein. In light of its high sequence similarity with Crtap, an endoplasmic reticulum (ER)-associated protein, and the importance of post-translational modifications such as collagen prolyl 3-hydroxylation in bone metabolism, we hypothesized that Sc65 was an ER-resident protein that would have an important role in bone homeostasis. In this study, we demonstrate that Sc65 is a previously unrecognized ER protein, and that it does not localize in the nucleus of somatic cells. Moreover, Sc65 is expressed and functional during skeletal development since loss of Sc65 results in a progressive osteopenia that affects both trabecular and cortical bone. Bone loss is due to increased bone resorption mediated by a non-cell autonomous effect on osteoclasts. Therefore, Sc65, like its related family member Crtap, is an important modulator of bone homeostasis, acting as a negative regulator of osteoclastogenesis.