Type 2 diabetes mellitus (T2DM) is associated with increased skeletal fragility and impaired fracture healing. Intermittent PTH therapy increases bone strength; however, its skeletal and metabolic effects in diabetes are unclear.Weassessed whether PTH improves skeletal and metabolic function in rats with T2DM. Subcritical femoral defects were created in diabetic fa/fa and nondiabetic +/+ Zucker Diabetic Fatty (ZDF) rats and internally stabilized. Vehicle or 75 μg/kg/d PTH(1-84) was sc administered over 12 weeks. Skeletal effects were evaluated by μCT, biomechanical testing, histomorphometry, and biochemical markers, and defect regeneration was analyzed by μCT. Glucose homeostasis was assessed using glucose tolerance testing and pancreas histology. In diabetic rats, bone mass was significantly lower in the distal femur and vertebrae, respectively, and increased after PTH treatment by up to 23% in nondiabetic and up to 18% in diabetic rats (P < .0001). Diabetic rats showed 23% lower ultimate strength at the spine (P < .0005), which was increased by PTH by 36% in normal and by 16% in diabetic rats (P < .05). PTH increased the bone formation rate by 3-fold in normal and by 2-fold in diabetic rats and improved defect regeneration in normal and diabetic rats (P < .01). PTH did not affect serum levels of undercarboxylated osteocalcin, glucose tolerance, and islet morphology. PTH partially reversed the adverse skeletal effects of T2DM on bone mass, bone strength, and bone defect repair in rats but did not affect energy metabolism. The positive skeletal effects were generally more pronounced in normal compared with diabetic rats.