To investigate the effects of diabetes and insulin treatment on trabecular bone, the morphologic and biomechanical characteristics of the femoral neck in rats with streptozotocin-induced diabetes were studied. Young Sprague-Dawley rats were divided into three groups, control, diabetic (DM), and diabetic with insulin (DI), and maintained for ten weeks. Cantilever-bending tests to failure were conducted on the proximal femur, and fracture-surface cross sections were analyzed. Morphologically, the femoral necks in diabetic rats decreased in the relative size of their cortical shell and increased their trabecular core. Structurally, the load and the energy at the proportional limit and the total energy in diabetic femoral necks were significantly less than controls. In material properties, the diabetic femoral necks had significantly less stress at the proportional limit. Compared to the DM group, the DI femoral necks had significantly greater load and energy at the proportional limit and significantly greater total energy. Femoral neck mechanical and morphologic properties in diabetic rats were significantly lower than controls, but insulin treatment ameliorated diabetic osteopathy in the rat femoral neck.