Background: Osteoporosis and fragility fractures incur substantial global morbidity and mortality. Adiponectin is made exclusively by adipocytes. Objectives: To study the association of rs2241766t>G SNP in the adiponectin gene with osteoporosis in T2DM postmenopausal women. Methods: This cross-sectional study was carried out with 200 postmenopausal Iraqi women, 160 T2DM women, and 40 aged match women as healthy control. T2DM patients were divided into two groups concerning their femoral neck T-score of bone mineral density (BMD). The osteoporotic (T2DM-OSO) group has consisted of 80 T2DM postmenopausal women with T-score smaller than -2.5 SD, and the non-osteoporotic T2DM women (T2DM) group consisted of 80 T2DM postmenopausal women with T-score bigger than -1 SD. Serum adiponectin concentrations and genotyping of rs2241766t>G SNP in the adiponectin gene were determined. Results: The biochemical data pointed out significant differences in HOMA-S %, HOMA-IR%, and HOMA-β % in the T2DM-OSO group concerning those of the T2DM group, genotyping results of selected adiponectin gene polymorphism rs2241766 was associated with incident T2DM-OSO. Additionally, there was a significant association of the (TG+GG) genotype with a lower adiponectin level. Conclusion: This study demonstrated that BMD is affected by adiponectin that may be as a result of genetic variation in populations. Serum adiponectin and its genotype may be correlated with BMD, which may have an application for assessing the susceptibility to osteoporosis in type 2 diabetic postmenopausal women clinically.