The Centers for Disease Control and Prevention in 2012 indicated that over 29 million Americans have diabetes. Hyperglycemia is a diagnostic indicator of diabetes. Diabetes has two main forms: type 1 (T1D) and type 2 (T2D). In T1D, hyperglycemia occurs as a result of little or no insulin production by pancreatic beta cells, thus glucose is unable to be taken up by cells that have insulin-dependent glucose channels. In T2D, hyperglycemia results from insulin resistance that leads to reduced insulin signaling and glucose uptake in insulin-dependent cells. Long-term diabetes affects multiple organ systems resulting in complications such as neuropathy, nephropathy, and retinopathy as well as less well-known complications such as increased fracture risk. Both T1D and T2D patients are at risk for fractures but the underlying pathophysiology is somewhat different [1–6]. T1D is associated with reduced bone density while T2D is often linked with increased or unaltered bone density. Thus, there are likely separate and overlapping mechanisms. In this chapter we will focus on understanding the effects of T1D and T2D on the bone microenvironment, stem cell maturation and bone remodeling with particular emphasis on osteoblast, osteoclast, and immune cell activity and composition. Understanding the underlying mechanisms of diabetic bone changes is critical for identifying and developing effective therapeutics.