Although previous studies have investigated the relationship between fracture risk and type 2 diabetes (T2D), cohort studies that estimate composite osteoporosis risk are lacking. This retrospective cohort study sought to determine the risk of osteoporosis in Taiwanese patients with T2D. Patients diagnosed with T2D between 2002 and 2015 identified through the 2002 Taiwan Survey of Hypertension, Hyperglycemia, and Hyperlipidemia were included. A total of 1690 men and 1641 women aged ≥40 years linked to the National Health Insurance Research Database (NHIRD) were followed up to the end of 2015 to identify the incidences of osteoporosis through ICD9-CM codes for osteoporosis or osteoporotic fractures or usage of anti-osteoporotic agents according to Anatomical Therapeutic Chemical codes determined from NHIRD. The person year approach and Kaplan-Meier analysis were then used to estimate the incidences and cumulative event rates, whereas the Cox proportional hazard model was used to calculate adjusted hazard ratios (HR) for osteoporosis events. A total of 792 new osteoporosis events were documented over a median follow-up duration of 13.6 years. Participants with T2D had higher osteoporosis risk [adjusted HR: 1.37, 95% confidence interval (CI): 1.11-1.69] compared with those without T2D. Subgroup analyses revealed that age had a marginally significant effect, indicating that T2D had a more pronounced effect on osteoporosis risk in younger population (<65 years old). No difference was found between patients stratified according to sex. In conclusion, T2D was significantly associated with increased osteoporosis risk, especially in younger participants.