Accumulating evidence suggests a reciprocal relationship between muscle and bone. Previous in vitro studies showed that the muscle-derived factors, osteoglycin (OGN) and family with sequence similarity 5, member C (FAM5C), regulate osteoblastic differentiation. However, there are no reports investigating the association between circulating OGN and FAM5C and bone metabolism in humans.We conducted a cross-sectional study and investigated the association of serum OGN and FAM5C levels and muscle mass examined by whole-body dual-energy x-ray absorptiometry with bone mineral density (BMD), bone turnover markers, and the presence of vertebral fractures (VFs) in 156 postmenopausal women with type 2 diabetes mellitus (T2DM).Multiple regression analysis adjusted for age, duration of T2DM, body mass index, serum creatinine, and log(hemoglobin A1c) showed that log(OGN) was negatively associated with BMD at the femoral neck (β=−0.17, p=0.014). Serum OGN levels were higher in subjects with VFs than in those without VFs [mean±standard deviation (SD): 100.2±84.7 vs. 74.4±31.7pg/mL, p=0.013]. Moreover, logistic regression analysis adjusted for the confounding factors described above showed that the serum OGN level was positively associated with the presence of VFs (odds ratio=1.84, 95% confidence interval=1.03–3.29 per SD increase, p=0.039). In contrast, neither the serum FAM5C level nor muscle mass indices were associated with bone turnover markers and the presence of VFs.The present study showed for the first time that higher serum OGN levels were associated with decreased BMD and increased risk of vertebral fractures in postmenopausal women with T2DM.