Osteoprotegerin (OPG) is a circulating decoy receptor for RANKL, a multifunctional cytokine essential for the differentiation of tissue-specific cells in bone and immune systems such as osteoclasts, medullary thymic epithelial cells (mTECs), and intestinal microfold cells (M cells). However, it is unknown whether OPG functions only at the production site or circulates to other tissues acting in an endocrine fashion. Here we explore the cellular source of OPG by generating OPG-floxed mice and show that locally produced OPG, rather than circulating OPG, is crucial for bone and immune homeostasis. Deletion of OPG in osteoblastic cells leads to severe osteopenia without affecting serum OPG. Deletion of locally produced OPG increases mTEC and M cell numbers while retaining the normal serum OPG level. This study shows that OPG limits its functions within the tissue where it was produced, illuminating the importance of local regulation of the RANKL system.