Diabetes is associated with increased skeletal fragility, despite higher bone mineral density (BMD). Alternative measures are necessary to more accurately determine fracture risk in individuals with diabetes. Therefore, we aimed to describe the relationship between trabecular bone score (TBS) and normoglycaemia, impaired fasting glucose (IFG) and diabetes and determine whether TBS-adjusted FRAX (Aus) score differed between these groups. This study included 555 men (68.7 ± 12.2 years) and 514 women (62.0 ± 12.0 years), enrolled in the observational Geelong Osteoporosis Study. IFG was considered as fasting plasma glucose (FPG) ≥ 5.5 mmol/L and diabetes as FPG ≥ 7.0 mmol/L, with the use of antihyperglycaemic medication and/or self-report. Using multivariable regression, the relationship between groups and TBS was determined. Men and women (all ages) with diabetes had lower mean TBS compared to those with normoglycaemia, in models adjusted for age, height and weight/waist circumference (all p < 0.05). Men with IFG had lower mean TBS in the age-adjusted models only (all p < 0.05). The addition of TBS to the FRAX score improved the discrimination between glycaemia groups, particularly for younger women (< 65 years). There was no difference in TBS detected between normoglycaemia and IFG; however, those with diabetes had lower TBS. Thus, the increased fracture risk in men and women with diabetes may be a result of BMD-independent bone deterioration. TBS adjustment of FRAX scores may be useful for younger women (< 65 years) with diabetes. This suggests that halting or reversing progression from IFG to diabetes could be important to prevent skeletal fragility in diabetes.