Polyhomeotic homolog 3 (PHC 3) is a member of the human polycomb complex and has been regarded as a candidate tumor suppressor of osteosarcoma. In the present paper, we performed a mutation survey and PHC3 expression analysis by quantitative real-time PCR using 10 osteosarcoma cell lines and 42 primary osteosarcoma samples. Relative PHC3 expression values of clinical samples were analyzed with clinical outcomes, and it was suggested that lower PHC3-expressing patients had significantly worse overall survival. Relative PHC3 values of clinical samples were less than those of normal bone tissues, whereas they were greater than those of cell lines. By denaturing high performance liquid chromatography analysis and direct sequencing, we found a PHC3 missense mutation in U2OS cells, which resulted in arginine56 to proline substitution. The same point mutation existed in four of 42 primary osteosarcoma samples. Regarding functional analysis, PHC3 expression significantly suppressed the colony formation of tumor cells. Intriguingly, polycomb repressive complex 1 members, Bmi1 and Ring1b proteins, were reduced in PHC3-expressing osteosarcoma cells. Deletion mutant PHC3 expression suggested that the carboxyl terminus of PHC3 has a role in suppression; the above-mentioned point mutation of PHC3 also lost inhibitory activities. Conversely, Bmi1 expression reduced PHC3 at the mRNA level and induced the proliferation of osteosarcoma cells. Taken together, we confirmed the role of PHC3 as a tumor suppressor in osteosarcoma cells and found that PHC3-dependent tumor suppression may be caused by modification of the composition of polycomb repressive complex 1 in cancer cells.