ADP-ribosylation-like factor 6 interacting protein 5 (Arl6ip5), which belongs to the prenylated rab-acceptor-family, has an important role in exocytic protein trafficking, glutathione metabolism and involves in cancer progression. However, its expression pattern and functional role in bone are unknown. Here we demonstrate that Arl6ip5 knock-out mice (Arl6ip5 (Δ2/Δ2)) show marked decrease of bone mineral density, trabecular bone volume and trabecular thickness. Histomorphometric studies reveal that bone formation parameters are decreased but bone resorption parameters and mRNA level of osteoclast-specific markers are increased in Arl6ip5(Δ2/Δ2) mice. In osteoblast, we demonstrate that Arl6ip5 abundantly expresses in osteoblastic cells and is regulated by bone metabolism-related hormones and growth factors. In vitro analysis reveals that osteoblast proliferation and differentiation are impaired in Arl6ip5 knocked-down and deficient primary osteoblast. Arl6ip5 is also found to function as an ER calcium regulator and control calmodulin signaling for osteoblast proliferation. Moreover, Arl6ip5 insufficiency in osteoblast induces ER stress and enhances ER stress-mediated apoptosis. CCAAT/enhancer-binding protein homologous protein (Chop) is involved in the regulation of apoptosis and differentiation in Arl6ip5 knocked-down osteoblasts. For osteoclastogenesis, Arl6ip5 insufficiency in osteoclast precursors has no effect on osteoclast formation. However, knocked-down osteoblastic Arl6ip5 induces receptor activator of nuclear factor-κB ligand (RANKL) expression and enhances osteoclastogenesis. In addition, ER stress and Chop are involved in the RANKL expression in Arl6ip5 knocked-down osteoblasts. In conclusion, we demonstrate that Arl6ip5 is a novel regulator of bone formation in osteoblasts.