OBJECTIVE - To examine whether postmenopausal women with diabetes experienced a higher incidence of hip fracture than women without diabetes. RESEARCH DESIGN AND METHODS - A prospective cohort of 32,089 postmenopausal women residing in Iowa were surveyed by mail in 1986 and followed for 11 years. Diabetes status and other potential risk factors were assessed by questionnaires at baseline; incidence of hip fracture was ascertained by follow-up questionnaires. RESULTS - A total of 490 hip fractures were reported over 306,900 person-years of follow-up. After adjustment for age, smoking status, estrogen use, BMI, and waist-to-hip ratio, women with type 1 diabetes (n = 47) were 12.25 times (95% CI 5.05-29.73) more likely to report an incident hip fracture than women without diabetes. Women with type 2 diabetes had a 1.70-fold higher risk (1.21-2.38) of incident hip fracture than women without diabetes. Longer duration of type 2 diabetes was associated with higher incidence, as was use of insulin or oral diabetes medications in women with type 2 diabetes. Furthermore, women who were initially free of diabetes but in whom diabetes developed had a relative risk of hip fracture of 1.60 (1.14-2.25) compared with women who never had diabetes. CONCLUSIONS - Postmenopausal women who have diabetes or in whom diabetes develops are at higher risk for hip fracture than nondiabetic postmenopausal women. Strategies to prevent osteoporosis and/or falling may be especially warranted in women with diabetes.