In a cross-sectional study we investigated the relationship between muscle and bone parameters in mid-thigh in older people using data from a single axial computed tomography (CT) section through the mid-thigh. Additionally we studied the association of these variables with incident low trauma lower limb fractures. A total of 3762 older individuals (1838 men and 1924 women) age 66-96 years, participants in the AGES-Reykjavík Study, were studied. The total cross-sectional muscular area and knee extensor strength declined with age similarly in both sexes. Muscle parameters correlated most strongly with cortical area and total shaft area (adjusted for age, height and weight) but explained less than 10% of variability in those bone parameters. The increment in medullary area and buckling ratio with age was almost fourfold greater in women than men. The association between medullary area and muscle parameters was non-significant. One hundred-thirteen women and 66 men sustained incident lower limb fractures during median follow-up of 5.3 years. Small muscular area, low knee extensor strength, large medullary area, low cortical thickness and high buckling ratio were significantly associated with fractures in both sexes. Our results show that bone and muscle loss proceeds at different rates and with different gender patterns.