Excessive bone disruption, driven by upregulation of bone-degrading osteoclasts, occurs in several pathologies, including breast cancer osteolytic bone metastasis, a condition associated with poor prognosis and diminished quality of life for patients. The matricellular protein thrombospondin-1 (TSP-1) plays pleiotropic roles in physiological and pathological remodeling of several tissues, including bone, and in shaping the microenvironment of primary tumors and metastasis. This study aimed to explore the role of TSP-1 in bone remodeling associated with osteolytic bone metastasis. We have identified a C-terminal fragment of TSP-1, E123CaG, that inhibited RANKL-induced osteoclast differentiation. Cleavage of TSP-1 by serine proteases released by mature osteoclasts, particularly HTRA1, generated a similar fragment, indicating a possible role as a feedback mechanism of control. E123CaG bound RANK, the RANKL receptor on osteoclast precursors, and impaired early (the MAPKs p38 and JNK) and late (NFATc1) downstream signaling. E123CaG also bound osteoprotegerin (OPG), the decoy receptor of RANKL, in this case further potentiating its inhibitory activity by protecting it from degradation by proteases, including HTRA1. In an in vivo model of osteolytic bone metastasis, the expression of E123CaG by murine breast cancer cells reduced osteolytic lesions and prolonged survival, indicating that the C-terminal TSP-1 fragment is also active in vivo and can protect the bone against metastasis-associated osteolysis. Our findings indicate that the release in the bone environment of this TSP-1 fragment, with its unique dual ability to inhibit RANK signaling while potentiating OPG activity, represents an important mechanism to control bone remodeling in osteolytic bone metastasis.