We examined the role of muscle strength, lean tissue distribution, and overall body composition as indicators of osteoporosis (OP) in a pooled sample of 979 Finnish postmenopausal women (mean age 68.1 years) from the Kuopio Osteoporosis Risk Factor and Prevention study. Bone mineral density (BMD) at the femoral neck (FN) and total body composition were assessed by dual-energy X-ray absorptiometry scans. The women (n = 979) were divided into three groups according to WHO criteria, based on FN BMD T score: normal (n = 474), osteopenia (n = 468), and OP (n = 37). Soft tissue proportions, fat mass index (FMI, fat/height²), lean mass index (LMI, lean/height²), and appendicular skeletal muscle mass (ASM, (arms + legs)/height²) were calculated. Handgrip and knee extension strength measurements were made. OP subjects had significantly smaller LMI (p = 0.001), ASM (p = 0.001), grip strength (p < 0.0001), and knee extension strength (p < 0.05) but not FMI (p > 0.05) compared to other subjects. Grip and knee extension strength were 19 and 16 % weaker in OP women compared to others, respectively. The area under the receiver operating characteristic curve was 69 % for grip and 71 % for knee extension strength. In tissue proportions only LMI showed predictive power (63 %, p = 0.016). An overall linear association of LMI (R² = 0.007, p = 0.01) and FMI (R² = 0.028, p < 0.001) with FN BMD remained significant. In the multivariate model, after adjusting for age, grip strength, leg extension strength, FMI, LMI, number of medications, alcohol consumption, current smoking, dietary calcium intake, and hormone therapy, grip strength (adjusted OR = 0.899, 95 % CI 0.84-0.97, p < 0.01), leg extension strength (OR = 0.998, 95 % CI 0.99-1, p < 0.05), and years of hormone therapy (OR = 0.905, 95 % CI 0.82-1, p < 0.05) remained as significant determinants of OP. Muscle strength tests, especially grip strength, serve as an independent and useful tool for postmenopausal OP risk assessment. In addition, lean mass contributes to OP in this age group. Muscle strength and lean mass should be considered separately since both are independently associated with postmenopausal BMD.