Type 2 diabetes mellitus (T2DM) is one of the most common chronic diseases worldwide and it is associated with an increased risk of osteoporosis and fragility fractures. Our aim is to analyze the effect of T2DM on bone quality. This is a case-control study. The studied population consisted of 140 patients: 54 subjects with hip fracture (OP) without T2DM, 36 patients with hip fracture and T2DM (OP-T2DM), 28 patients with osteoarthritis (OA) without T2DM, and 22 patients with OA and T2DM (OA-T2DM). Bone markers, bone mineral density, FRAX score, microstructural, and bone material strength from femoral heads were assessed. The group with hip fracture presented lower BMD values than OA (p < 0.05). The OP, OP-T2DM, and OA-T2DM groups showed a decrease in bone volume fraction (BV/TV), in trabecular number (Tb.N), and in trabecular thickness (Tb.Th), while an increase was presented in the structural model index (SMI) and trabecular bone pattern factor (Tb.Pf), The groups OP, OP-T2DM, and OA-T2DM also presented lower values than those in group OA regarding the biomechanical parameters in the form of Young’s modulus or elastic modulus, toughness, ultimate stress, ultimate load, extrinsic stiffness, and work to failure (p < 0.05). Our results show the negative effect of type 2 diabetes mellitus on trabecular bone structure and mechanical properties.