Mucolipidosis type II (MLII) is a severe multi‐systemic genetic disorder caused by missorting of lysosomal proteins and the subsequent lysosomal storage of undegraded macromolecules. Although affected children develop disabling skeletal abnormalities, their pathogenesis is not understood. Here we report that MLII knock‐in mice, recapitulating the human storage disease, are runted with accompanying growth plate widening, low trabecular bone mass and cortical porosity. Intralysosomal deficiency of numerous acid hydrolases results in accumulation of storage material in chondrocytes and osteoblasts, and impaired bone formation. In osteoclasts, no morphological or functional abnormalities are detected whereas osteoclastogenesis is dramatically increased in MLII mice. The high number of osteoclasts in MLII is associated with enhanced osteoblastic expression of the pro‐osteoclastogenic cytokine interleukin‐6, and pharmacological inhibition of bone resorption prevented the osteoporotic phenotype of MLII mice. Our findings show that progressive bone loss in MLII is due to the presence of dysfunctional osteoblasts combined with excessive osteoclastogenesis. They further underscore the importance of a deep skeletal phenotyping approach for other lysosomal diseases in which bone loss is a prominent feature.