Protocadherin-7 (Pcdh7) is a member of the non-clustered protocadherin δ1 subgroup of the cadherin superfamily. Although the cell-intrinsic role of Pcdh7 in osteoclast differentiation has been demonstrated, the molecular mechanisms of Pcdh7 regulating osteoclast differentiation remain to be determined. Here, we demonstrate that Pcdh7 contributes to osteoclast differentiation by regulating small GTPases, RhoA and Rac1, through its SET oncoprotein binding domain. Pcdh7 is associated with SET along with RhoA and Rac1 during osteoclast differentiation. Pcdh7-deficient (Pcdh7 ) cells showed abolished RANKL-induced RhoA and Rac1 activation, and impaired osteoclast differentiation. Impaired osteoclast differentiation in Pcdh7 cells was restored by retroviral transduction of full-length Pcdh7 but not by a Pcdh7 mutant that lacks SET binding domain. The direct crosslink of the Pcdh7 intracellular region induced the activation of RhoA and Rac1, which was not observed when Pcdh7 lacks the SET binding domain. Additionally, retroviral transduction of the constitutively active form of RhoA and Rac1 completely restored the impaired osteoclast differentiation in Pcdh7 cells. Collectively, these results demonstrate that Pcdh7 controls osteoclast differentiation by regulating RhoA and Rac1 activation through the SET binding domain.