Pycnodysostosis is a genetic bone disease featuring the unique bone homeostasis disorders of osteolysis and osteopetrosis in the same organism. The pathomechanism for pycnodysostosis has been largely unknown due to the unavailability of a pycnodysostosis mouse model with all the traits of the disease. We generated cathepsin K^−/− mouse strains in the 129/Sv and C57BL/6J backgrounds and found that, only in the 129/Sv background, cathepsin K^−/− mice exhibit many characteristics of the human pycnodysostosis-like phenotype. Our data indicated that 129/Sv cathepsin K^−/− osteoclasts (OCs) lacked normal apoptosis and senescence and exhibited over-growth both in vitro and in vivo. These abnormalities resulted in an unusually high OC number, which is consistent with a recent case study of human pycnodysostosis. Our results show that cathepsin K function has different effects around the skeleton due to site-specific variations in bone homeostasis, such as phenotypes of osteopetrosis in tibiae and osteolysis in calvariae as a result of cathepsin K mutation. Our data demonstrated that the expression levels of p19, p53 and p21 were significantly reduced in 129/Sv cathepsin K^−/− OCs and forced expression of cathepsin K in pre-OCs induced premature senescence and increased expression of p19, p53 and p21. This is the first evidence that cathepsin K plays a key role in OC apoptosis and senescence, revealing the importance of OC senescence in bone homeostasis. The finding of this novel cathepsin K function provides insight into the pathomechanism of pycnodysostosis and may provide new drug targets for diseases involved in OC-related abnormal bone homeostasis.