Evidence suggests that bone quality is poorer and fracture risk is higher in patients with diabetes, even those with normal bone mineral density. The aim of this study was to determine the effects of raloxifene on lipid, bone, and glucose metabolism in postmenopausal women with type 2 diabetes. The study subjects (144 postmenopausal women aged less than 80 years with type 2 diabetes) were randomly assigned into three groups: no medication, alfacalcidol 1 μg/day, or raloxifene hydrochloride 60 mg/day. The primary endpoint was the change in LDL-C at 6 months. Raloxifene significantly decreased the levels of bone metabolism markers NTX and BAP at 6 months in patients with diabetes. The primary endpoint, LDL-C at 6 months, was significantly lower in the raloxifene group than in the other two groups. However, percent changes in HDL-C were not significantly different among the three groups. Although glucose metabolism was unaffected, homocysteine, a bone quality marker, was significantly decreased at 6 months in the raloxifene group. The percent improvement in LDL-C did not correlate with percent improvement in any bone metabolism or bone quality markers. Raloxifene, unlike estrogen, improved LDL-C and decreased homocysteine, indicating that raloxifene can potentially improve LDL-C as well as bone quality in postmenopausal women with type 2 diabetes.