Individuals with type 2 diabetes have lower trabecular bone score (TBS) and increased fracture risk despite higher bone mineral density. However, measures of trabecular microarchitecture from high-resolution peripheral computed tomography are not lower in type 2 diabetes. We hypothesized that confounding effects of abdominal tissue thickness may explain this discrepancy, since central obesity is a risk factor for diabetes and also artifactually lowers TBS. This hypothesis was tested in individuals aged 40 years and older from a large DXA registry, stratified by sex and diabetes status. When DXA-measured abdominal tissue thickness was not included as a covariate, men without diabetes had lower TBS than women without diabetes (mean difference -0.074, P < .001). TBS was lower in women with versus without diabetes (mean difference -0.037, P < .001), and men with versus without diabetes (mean difference -0.007, P = .042). When adjusted for tissue thickness these findings reversed, TBS became greater in men versus women without diabetes (mean difference +0.053, P < .001), in women with versus without diabetes (mean difference +0.008, P < .001), and in men with versus without diabetes (mean difference +0.014, P < .001). During mean 8.7 years observation, incident major osteoporotic fractures were seen in 7048 (9.6%). Adjusted for multiple covariates except tissue thickness, TBS predicted fracture in all subgroups with no significant diabetes interaction. When further adjusted for tissue thickness, HR per SD lower TBS remained significant and even increased slightly. In conclusion, TBS predicts fractures independent of other clinical risk factors in both women and men, with and without diabetes. Excess abdominal tissue thickness in men and individuals with type 2 diabetes may artifactually lower TBS using the current algorithm, which reverses after accounting for tissue thickness. This supports ongoing efforts to update the TBS algorithm to directly account for the effects of abdominal tissue thickness for improved fracture risk prediction.