Interleukin (IL)‐27 is a heterodimeric cytokine that is known to have both stimulatory and inhibitory functions during immune responses. We investigated the effects of IL‐27 on arthritis and bone erosion in the murine collagen‐induced arthritis (CIA) model. We demonstrate that the inhibitory effect of IL‐27 on osteoclastogenesis is associated with interferon‐γ (IFN‐γ) production by using an IFN‐γ knockout mouse model. The IL‐27‐Fc was injected into both CIA and IFN‐γ‐deficient mice. The effects of IL‐27‐Fc on osteoclast differentiation were evaluated both in vitro and in vivo. The IL‐27‐Fc‐injected mice showed significantly lower arthritis indices and fewer tartrate‐resistant acid‐phosphatase‐positive osteoclasts in their joint tissues than untreated mice. Interleukin‐27 inhibited osteoclastogenesis from bone marrow‐derived mononuclear cells in vitro, which was counteracted by the addition of anti‐IFN‐γ antibody. The IL‐27‐Fc did not affect arthritis in IFN‐γ knockout mice. Interleukin‐27 also suppressed osteoclast differentiation in human and intriguingly, it could promote the expression of IFN‐γ on priming osteoclasts. These results imply that IL‐27 suppressed the generation of CIA and osteoclastogenesis, which were mediated by the induction of IFN‐γ.