Type 2 diabetes is associated with higher fracture risk. Diabetes-related conditions may account for this risk. Cardiovascular Health Study participants (N = 5641; 42.0% men; 15.5% black; 72.8±5.6 years) were followed 10.9 ± 4.6 years. Diabetes was defined as hypoglycemic medication use or fasting glucose (FG) ≥126 mg/dL. Peripheral artery disease (PAD) was defined as ankle-arm index <0.9. Incident hip fractures were from medical records. Crude hip fracture rates (/1000 person-years) were higher for diabetic vs. non-diabetic participants with BMI <25 (13.6, 95% CI: 8.9-20.2 versus 11.4, 95% CI: 10.1-12.9) and BMI ≥25 to <30 (8.3, 95% CI: 5.7-11.9 versus 6.6, 95% CI: 5.6-7.7), but similar for BMI ≥30. Adjusting for BMI, sex, race, and age, diabetes was related to fractures (HR = 1.34; 95% CI: 1.01-1.78). PAD (HR = 1.25 (95% CI: 0.92-1.57)) and longer walk time (HR = 1.07 (95% CI: 1.04-1.10)) modified the fracture risk in diabetes (HR = 1.17 (95% CI: 0.87-1.57)). Diabetes was associated with higher hip fracture risk after adjusting for BMI though this association was modified by diabetes-related conditions.