Denosumab (DMAb) is widely used as a neoadjuvant therapy to downstage giant cell tumor of bone (GCTB). However, increasing evidence demonstrates that neoadjuvant DMAb may increase the local recurrence (LR) risk following curettage of GCTB. It remains unclear about the potential mechanisms for neoadjuvant DMAb-associated LR of GCTB. Here, we perform single-cell RNA sequencing on untreated primary GCTB, neoadjuvant DMAb-treated primary GCTB, and relapsed GCTB following discontinuation of DMAb after curettage. A total of 33,440 cells are obtained. Osteoclast-like giant cells nearly disappear in primary GCTB after neoadjuvant DMAb treatment, but rebound following DMAb discontinuation in recurrent GCTB. Neoadjuvant DMAb therapy induces the transformation of TNFSF11 (RANKL)-positive neoplastic cells into SPP1 (osteopontin)-positive and CA2-positive neoplastic cells. Neoadjuvant DMAb therapy induces a durable intratumoral immunosuppressive environment, characterized by an increased frequency of regulatory T cells (Tregs) and decreased levels of cytotoxic CD8+ T cells and natural killer T (NKT) cells. In addition, DMAb-induced differentiation of monocytes to Trem2+ macrophages provides a favorable microenvironment that facilitates tumor relapse. CSF1R inhibitor can inhibit the tumor growth of recurrent GCTB. Targeting CSF1R and alleviating T cell exhaustion may provide therapeutic insights for the management of relapsed GCTB following DMAb discontinuation.