Background: Postmenopause and type 2 diabetes mellitus (T2DM) are associated with higher fracture risk. Sex hormones are important in maintaining woman skeleton health. The relationships of sex hormone(s) with bone mineral density (BMD) and fracture risk are still unclear in diabetic-postmenopausal women. This study aimed to investigate the relationships of sex hormones with BMDs and fracture risk in postmenopausal women with T2DM. Methods: Two hundred and fourteen postmenopausal women with T2DM were included. BMDs at lumbar spine (L2-4), femoral neck (FN) and total hip (TH) were measured by dual-energy X-ray absorptiometry (DXA). The 10-year probability of fractures was accessed by modified fracture risk algorithm (FRAX) tool. Serum concentrations of sex hormones were measured. Results: Sex hormone binding globulin (SHBG) was a determinant of BMDs at L2-4 (beta=-0.199, P< 0.05), TH (beta=-0.233, P< 0.05), major osteoporotic fracture (MOF) (beta= 0.253, P< 0.001) and hip fracture (HF) (beta= 0.262, P< 0.001). Per SD increase in SHBG caused a 2% increase in the risk of osteoporosis/osteopenia. SHBG in quartile-4 was associated with 4.21 higher risk of osteoporosis/osteopenia compared with SHBG in quartile-1. Conclusions: In postmenopausal women with T2DM, higher serum SHBG tended to be associated with lower BMDs, and increased the risk of osteoporosis/osteopenia and the fracture risk.