Background: Cholestatic liver diseases exhibit higher levels of serum γ-glutamyl transpeptidase (GGT) and incidence of secondary osteoporosis. GGT has been identified as a novel bone-resorbing factor that stimulates osteoclast formation. The aim of this study was to elucidate the interaction of elevated GGT levels and cholestatic liver disease-induced bone loss. Methods: Wistar rats were divided into three groups: sham-operated control (SO) rats, bile duct ligation (BDL) rats, and anti-GGT antibody-treated BDL rats (AGT). Serum GGT level was measured. Bone mineral density (BMD) was analyzed by dual-energy X-ray absorptiometry. Bone morphometric parameters and microarchitectural properties were determined by micro-computed tomography and histomorphometry of the distal metaphysis of femurs. Alterations of bone metabolism-related factors were evaluated by cytokine array. Effects of GGT on osteoblasts or stromal cells were evaluated by RT-PCR, enzyme activity, and mineralization ability. Results: Serum levels of GGT were significantly elevated in the BDL-group. In the BDL group, BMD, bone mass percentage, and osteoblast number were significantly decreased, whereas osteoclast number was significantly increased. These alterations were markedly attenuated in the AGT group. The mRNA levels of vascular endothelial growth factor-A, LPS-induced CXC chemokine, monocyte chemoattractant protein-1, tumor necrosis factor-α interleukin-1β and receptor activator of nuclear factor-kappa B ligand were upregulated, and those of interferon-γ and osteoprotegerin were downregulated in the GGT-treated stromal cells. Furthermore, GGT inhibited mineral nodule formation and expression of alkaline phosphatase and bone sialo-protein in osteoblastic cells. Conclusion: Our results indicate that elevated GGT level is involved in hepatic osteodystrophy through secretion of bone resorbing factor from GGT-stimulated osteoblasts/bone marrow stromal cells. In addition, GGT also possesses suppressive effects on bone formation. Managing elevated GGT levels by anti-GGT antibody may become a novel therapeutic agent for hepatic osteodystrophy in chronic liver diseases.