Clinical evidence indicates that bone status is affected in patients with type 2 diabetes mellitus (T2DM). Regardless of normal or even high bone mineral density, T2DM patients have increased risk of fractures. One class of antidiabetic drugs, thiazolidinediones (TZDs), causes bone loss and further increases facture risk, placing TZDs in the category of drugs causing secondary osteoporosis. Risk factors for development of TZD-induced secondary osteoporosis are gender (women), age (elderly), and duration of treatment. TZDs exert their antidiabetic effects by activating peroxisome proliferator-activated receptor-γ (PPAR-γ) nuclear receptor, which controls glucose and fatty acid metabolism. In bone, PPAR-γ controls differentiation of cells of mesenchymal and hematopoietic lineages. PPAR-γ activation with TZDs leads to unbalanced bone remodeling: bone resorption increases and bone formation decreases. Laboratory research evidence points toward a possible separation of unwanted effects of PPAR-γ on bone from its beneficial antidiabetic effects by using selective PPAR-γ modulators. This review also discusses potential pharmacologic means to protect bone from detrimental effects of clinically used TZDs (pioglitazone and rosiglitazone) by using combinational therapy with approved antiosteoporotic drugs, or by using lower doses of TZDs in combination with other antidiabetic therapy. We also suggest a possible orthopedic complication, not yet supported by clinical studies, of delayed fracture healing in T2DM patients on TZD therapy.