Fracture risk in type 2 diabetes is increased despite normal or high bone mineral density, implicating poor bone quality as a risk factor. Raloxifene improves bone material and mechanical properties independent of bone mineral density. This study aimed to determine if raloxifene prevents the negative effects of diabetes on skeletal fragility in diabetes-prone rats. Adult Zucker Diabetic Sprague-Dawley (ZDSD) female rats (20-week-old, n = 24) were fed a diabetogenic high-fat diet and were randomized to receive daily subcutaneous injections of raloxifene or vehicle for 12 weeks. Blood glucose was measured weekly and glycated hemoglobin was measured at baseline and 12 weeks. At sacrifice, femora and lumbar vertebrae were harvested for imaging and mechanical testing. Raloxifene-treated rats had a lower incidence of type 2 diabetes compared with vehicle-treated rats. In addition, raloxifene-treated rats had blood glucose levels significantly lower than both diabetic vehicle-treated rats as well as vehicle-treated rats that did not become diabetic. Femoral toughness was greater in raloxifene-treated rats compared with both diabetic and non-diabetic vehicle-treated ZDSD rats, due to greater energy absorption in the post-yield region of the stress-strain curve. Similar differences between groups were observed for the structural (extrinsic) mechanical properties of energy-to-failure, post-yield energy-to-failure, and post-yield displacement. These results show that raloxifene is beneficial in preventing the onset of diabetes and improving bone material properties in the diabetes-prone ZDSD rat. This presents unique therapeutic potential for raloxifene in preserving bone quality in diabetes as well as in diabetes prevention, if these results can be supported by future experimental and clinical studies.