Diabetic osteoporosis is increasingly recognized as a significant comorbidity of type 1 diabetes mellitus. In contrast, type 2 diabetes mellitus is more commonly associated with modest increases in bone mineral density for age. Despite this dichotomy, clinical, in vivo, and in vitro data uniformly support the concept that new bone formation as well as bone microarchitectural integrity are altered in the diabetic state, leading to an increased risk for fragility fracture and inadequate bone regeneration following injury. In this review, we examine the contribution that insulin, as a potential anabolic agent in bone, may make to the pathophysiology of diabetic bone disease. Specifically, we have assimilated human and animal data examining the effects of endogenous insulin production, exogenous insulin administration, insulin sensitivity, and insulin signaling on bone. In so doing, we present evidence that insulin, acting as an anabolic agent in bone, can preserve and increase bone density and bone strength, presumably through direct and/or indirect effects on bone formation.