Type 2 diabetes (T2DM) is associated with a significant increase in risk of nonvertebral fractures, but information on risk of vertebral fractures (VFs) in subjects with T2DM, particularly among men, is lacking. Furthermore, it is not known whether spine bone mineral density (BMD) can predict the risk of VF in T2DM. We sought to examine the effect of diabetes status on prevalent and incident vertebral fracture, and to estimate the effect of lumbar spine BMD (areal and volumetric) as a risk factor for prevalent and incident morphometric vertebral fracture in T2DM (n ¼ 875) and nondiabetic men (n ¼ 4679). We used data from the Osteoporotic Fractures in Men (MrOS) Study, which enrolled men aged !65 years. Lumbar spine areal BMD (aBMD) was measured with dual-energy X-ray absorptiometry (DXA), and volumetric BMD (vBMD) by quantitative computed tomography (QCT). Prevalence (7.0% versus 7.7%) and incidence (4.4% versus 4.5%) of VFs were not higher in T2DM versus nondiabetic men. The risk of prevalent (OR, 1.05; 95% CI, 0.78 to 1.40) or incident vertebral-fracture (OR, 1.28; 95% CI, 0.81 to 2.00) was not higher in T2DM versus nondiabetic men in models adjusted for age, clinic site, race, BMI, and aBMD. Higher spine aBMD was associated with lower risk of prevalent VF in T2DM (OR, 0.55; 95% CI, 0.48 to 0.63) and nondiabetic men (OR, 0.66; 95% CI, 0.5 to 0.88) (p for interaction ¼ 0.24) and of incident VF in T2DM (OR, 0.50; 95% CI, 0.41 to 0.60) and nondiabetic men (OR, 0.54; 95% CI, 0.33 to 0.88) (p for interaction ¼ 0.77). Results were similar for vBMD. In conclusion, T2DM was not associated with higher prevalent or incident VF in older men, even after adjustment for BMI and BMD. Higher spine aBMD and vBMD are associated with lower prevalence and incidence of VF in T2DM as well as nondiabetic men.