Objective The relationship between diabetes mellitus and risk of fracture was not completely understood. This study evaluates the risk of facture in association with diabetes in a population-based retrospective cohort. Methods We identified 32471 adults newly diagnosed with diabetes in 2000-2003 from the Taiwan National Health Insurance Research Database. Comparison group consisted of 64942 adults without diabetes randomly selected from the same dataset, frequency matched by age and sex. Events of fracture from 2000-2008 were ascertained from medical claims. Multivariate adjusted hazard ratios (HRs) and 95% confidence intervals (CIs) were estimated for potential associated factors including diabetes, age, sex, low-income status, urbanization and coexisting medical conditions (such as hypertension, hyperlipidemia, liver cirrhosis, renal dialysis, mental disorders, ischemic heart disease, stroke and chronic obstructive pulmonary diseases). The odds ratios (ORs) and 95% CIs of Adverse events after facture in patients with diabetes were also calculated in the multivariate logistic regressions. Results During 652530 person-years of follow-up, there were 12772 newly diagnosed fracture cases. The cumulative risk of fracture for people with diabetes and without diabetes was 2.5% and 1.9%, respectively (P < 0.0001). Compared with people without diabetes, the adjusted HR of fracture was 1.66 (95% CI = 1.60-1.72) for people with diabetes. The ORs of post-fracture deep wound infection, septicemia and mortality associated with diabetes were 1.34 (95% CI = 1.06-1.71), 1.42 (95% CI = 1.23-1.64), and 1.27 (95% CI = 1.02-1.60), respectively. Conclusion Diabetes was associated with fracture. Patients with diabetes had more adverse events and subsequent mortality after fracture. Prevention of fracture and post-fracture adverse events were needed in this susceptible population.