Background Urinary incontinence has a significant impact on the psychosocial well-being of postmenopausal women. This study aimed to determine the relationship between urinary incontinence with sexual function and quality of life. Method It was a cross-sectional study using cluster sampling on 433 postmenopausal women in Tabriz-Iran, 2021–2022. Data were collected using questionnaires of socio-demographic and obstetrics characteristics, female sexual function index (FSFI), Menopause-Specific Quality of Life (MENQOL), and Urinary Incontinence Diagnosis (UIDQ). Independent sample t-test and general linear model (GLM) were used to compare the quality of life and sexual function score between the two groups of women with and without stress, urgency, and mixed urinary incontinence. Results Independent sample t-test showed a significant difference in the quality of life and sexual function between women with and without stress, urgency, and mixed urinary incontinence ( p < 0.05). Based on the GLM with adjusting the socio-demographic and obstetrics characteristics, women without stress incontinence reported a lower mean score of MENQOL (B = − 23.38; 95% CI = −30.1 to −16.6; p < 0.001) and a higher mean score of sexual function (B = 4.5; 95% CI = 2.1–7.0; p < 0.001) compared to women with stress incontinence; a lower MENQOL score and a higher sexual function score indicate better condition. However, there was no significant relationship between urgency and mixed incontinence with quality of life and sexual function ( p > 0.05). Conclusion As urinary incontinence remarkably affects sexual function and quality of life of postmenopausal women, health care providers should consider better solutions for this issue in their work program.