To determine whether type 2 diabetes is associated with fracture in older women, we analyzed data from 9654 women, age 65 yr or older, in the Study of Osteoporotic Fractures. Diabetes with age at onset 40 yr or older was reported by 657 women, of whom 106 used insulin. A total of 2624 women experienced at least one nonvertebral fracture during an average follow-up of 9.4 yr, and 388 had at least one vertebral fracture during an average interval of 3.7 yr. Although diabetes was associated with higher bone mineral density, it was also associated with a higher risk of specific fractures. Compared with nondiabetics, women with diabetes who were not using insulin had an increased risk of hip [relative risk (RR), 1.82; 95% confidence interval (CI), 1.24-2.69] and proximal humerus (RR, 1.94; 95% CI, 1.24-3.02) fractures in multivariate models controlling for age, body mass index, bone density, and other factors associated with fractures and diabetes. Insulin-treated diabetics had more than double the risk of foot (multivariate adjusted RR, 2.66; 95% CI, 1.18-6.02) fractures compared with nondiabetics. This study indicates that diabetes is a risk factor for hip, proximal humerus, and foot fractures among older women, suggesting that fracture prevention efforts should be a consideration in the treatment of diabetes.