Total 25(OH)D levels were determined to assess bone health in elderly populations; however, the bioavailability of 25(OH)D is regulated by the albumin and vitamin D binding protein (DBP) levels and DBP variations. Whether bioavailable 25(OH)D level is a superior biomarker for vitamin D than total 25(OH)D level regarding the BMD and the bone metabolism were not yet fully understood. With a community based cross-sectional study of 967 postmenopausal women, we found that the variant rs7041, but not rs4588, of DBP was significantly associated with the blood DBP level, which was positively correlated with the total 25(OH)D level but negatively associated with bioavailable 25(OH)D levels. Both total and bioavailable 25(OH)D levels were significantly correlated with the BMD value in postmenopausal women; however, only the bioavailable 25(OH)D level was an independent determinant of the BMD values when adjusted for age, body mass index and bone turnover biomarkers (OST and β-CTX). The bioavailable and total 25(OH)D were negatively correlated with bone formation biomarkers (OST, PINP and ALP) and PTH levels, while they were positively correlated with osteoprotegerin (OPG) level; however, the bone resorption biomarker (β-CTX) was not correlated with the 25(OH)D levels. An increment of PTH level, along with reduced bioavailable 25(OH)D levels, was evident when the bioavailable 25(OH)D level was < 5 ng/mL, which may be the optimal cutpoint for sufficient vitamin D in Chinese elderly women. The blood calcium, magnesium, ALP, TSH, FGF23, and phosphorus levels were not correlated with the total or the bioavailable 25(OH)D levels. These results suggested that high bioavailable 25(OH)D levels were correlated with reduced bone turnover processes and were a biomarker superior to total 25(OH)D for vitamin D in assessing the risks of bone-related diseases. The results indicate that the bioavailable 25(OH)D level should be determined in assessing the bone health.