Hormone replacement therapy (HRT) produces a small increase in bone mineral density (BMD) when measured by dual energy X-ray absorptiometry (DXA). The corresponding decrease in fracture risk is more impressive, implying that other factors that contribute to bone strength are favourably modified by HRT. We investigated, using peripheral quantitated computed tomography (pQCT), the changes produced by HRT in both the distribution of mineral between cortical and trabecular bone and the changes produced by HRT in the apparent structure of trabecular bone, expressed as average hole area and apparent connectivity. Twenty-one postmenopausal women starting HRT and 32 control women were followed for 2 years, with distal radius pQCT measurements every 6 months. HRT prevented the loss of total bone mass seen in controls (p < 0.02). HRT also produced an apparent rapid loss of trabecular bone mass within the first 6 months of the study (p < 0.02), with an associated rapid loss in the apparent connectivity (p = 0.034). Average hole area also increased but not to a statistically significant extent. Exogenous estrogen apparently fills small marrow pores close to the endocortical surface, such that the pQCT-defined boundary between trabecular and cortical bone is shifted in favour of cortical bone. Trabecular bone structure indices are adversely affected, as the central, poorly interconnected trabecular bone with greater than average marrow spaces constitutes a greater fraction of the remaining trabecular bone. This study suggests that the improvements in fracture risk resulting from HRT are explained by a reversal of net endocortical resorption of bone.