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Nowadays, more and more attention has been paid to osteoporosis caused by diabetes mellitus. Elevated levels of pro-inflammatory cytokines in diabetic patients activate the activity of osteoclasts through the RANKL/OPG pathway. The nuclear transcription factor SREBP2, a master regulator of cholesterol metabolism, has been found involved in osteoclastogenesis. In our previous study, we have identified anhydroicaritin as a potent inhibitor of transcription factor SREBPs, which improves dyslipidemia and insulin resistance. In this study, we demonstrated that anhydroicaritin could also decrease the level of SREBP2 and its target genes in osteoclasts induced by RANKL without significant cytotoxicity. Moreover, anhydroicaritin suppressed RANKL-induced osteoclasts differentiation. In STZ-induced diabetic mice model, we found that the osteoclasts were largely increased accompanied with deterioration of bone structure. Anhydroicaritin decreased the level of blood glucose and alleviated insulin resistance. More importantly, anhydroicaritin inhibited osteoclast differentiation and rescued diabetes-induced bone loss in vivo. In conclusion, anhydroicaritin, a potent SREBP2 inhibitor, inhibits the osteoclasts formation and improves diabetes-induced bone loss.