NOTCH-dependent signaling pathways are critical for normal bone remodeling; however, it is unclear if dysfunctional NOTCH activation contributes to inflammation-mediated bone loss, as observed in rheumatoid arthritis (RA) patients. We performed RNA sequencing and pathway analyses in mesenchymal stem cells (MSCs) isolated from transgenic TNF-expressing mice, a model of RA, to identify pathways responsible for decreased osteoblast differentiation. 53 pathways were dysregulated in MSCs from RA mice, among which expression of genes encoding NOTCH pathway members and members of the noncanonical NF-kappa B pathway were markedly elevated. Administration of NOTCH inhibitors to RA mice prevented bone loss and osteoblast inhibition, and CFU-fibroblasts from RA mice treated with NOTCH inhibitors formed more new bone in recipient mice with tibial defects. Overexpression of the noncanonical NF-kappa B subunit p52 and RELB in a murine pluripotent stem cell line increased NOTCH intracellular domain-dependent (NICD-dependent) activation of an RBPj kappa reporter and levels of the transcription factor HES1. TNF promoted p52/RELB binding to NICD, which enhanced binding at the RBPj kappa site within the Hes1 promoter. Furthermore, MSC- enriched cells from RA patients exhibited elevated levels of HES1, p52, and RELB. Together, these data indicate that persistent NOTCH activation in MSCs contributes to decreased osteoblast differentiation associated with RA and suggest that NOTCH inhibitors could prevent inflammation-mediated bone loss.