Context: Diabetes mellitus is associated with increased hip fracture risk, despite being associated with higher bone mineral density in the femoral neck. Objective: The objective of the study was to test the hypothesis that composite indices of femoral neck strength, which integrate dual-energy x-ray absorptiometry derived femoral neck size, femoral neck areal bone mineral density, and body size and are inversely associated with hip fracture risk, would be lower in diabetics than in nondiabetics and be inversely related to insulin resistance, the primary pathology in type 2 diabetes. Design: This was a cross-sectional analysis. Setting and Participants: The study consisted of a multisite, multiethnic, community-dwelling sample of 1887 women in pre- or early perimenopause. Outcome Measurements: Composite indices for femoral neck strength in different failure modes (axial compression, bending, and impact) were measured. Results: Adjusted for age, race/ethnicity, menopausal stage, body mass index, smoking, physical activity, calcium and vitamin D supplementation, and study site, diabetic women had higher femoral neck areal bone mineral density [+0.25 sd, 95% confidence interval (CI) (+0.06, +0.44) sd] but lower composite strength indices [−0.20 sd, 95% CI (−0.38, −0.03) sd for compression, −0.19 sd, 95% CI (−0.38, −0.003) sd for bending, −0.19 sd, 95% CI (−0.37, −0.02) sd for impact] than nondiabetic women. There were graded inverse relationships between homeostasis model-assessed insulin resistance and all three strength indices, adjusted for the same covariates. Conclusions: Despite having higher bone density, diabetic women have lower indices of femoral neck strength relative to load, consistent with their documented higher fracture risk. Insulin resistance appears to play an important role in bone strength reduction in diabetes.