The mechanisms leading to increased bone loss and skeletal fragility in women with postmenopausal osteoporosis are still poorly understood. Increased bone resorption, low serum estradiol and high serum sex‐hormone‐binding globulin (SHBG) recently have been reported as predictors of vertebral and hip fractures in elderly women. In a cohort of healthy untreated younger postmenopausal women aged 50–89 years (mean, 64 years), we compared baseline levels of bone markers and endogenous hormones in 55 women who subsequently had a fracture (20 vertebral and 35 peripheral fractures) with levels in the 380 women who did not fracture during a mean 5 years of follow‐up. Women with levels in the highest quartile of four bone resorption markers including urinary‐free deoxypyridinoline (D‐Pyr), urinary type I collagen N‐telopeptides (NTX), and urinary and serum type I collagen C‐telopeptides (CTX) had about a 2‐fold increased risk of fractures compared with women with levels in the three lowest quartiles with relative risk (RR) and 95% CI of 1.8 (1.0‐3.4) for free D‐Pyr, 1.7 (0.9‐3.2) for urinary NTX, 2.3 (1.3‐4.1) for urinary CTX, and 2.1 (1.2‐3.8) for serum CTX. Serum levels of bone alkaline phosphatase (BAP) in the highest quartile were associated with an RR of fracture of 2.4 (1.3‐4.2). Women with serum levels of estradiol and dehydroepiandrosterone (DHEA) sulfate in the lowest quartile had an RR of fracture of 2.2 (1.2‐4.0) and 2.1 (1.2‐3.8), respectively. Increased levels of SHBG and intact parathyroid hormone (PTH) were moderately associated with an increased risk of fracture. Similar results were obtained when the analysis was restricted to symptomatic vertebral and nonvertebral fractures. Adjustment of biochemical markers by hormone levels did not significantly alter the results. Women with both high bone resorption markers and low estradiol (or low DHEA sulfate) had a higher risk of fracture with RRs of 3.0‐3.3 (p < 0.001). After adjustment for bone mineral density (BMD) of the hip, spine, radius, or total body, bone markers and hormones were still predictive of fracture risk with similar RRs. We conclude that high levels of some biochemical markers of bone turnover, low serum estradiol, low DHEA sulfate, high SHBG, and high PTH are associated with increased risk of osteoporotic fracture in postmenopausal women, independently of each other and of BMD. The mechanism by which some postmenopausal women have an increased rate of bone turnover leading to an increased risk of fracture remains to be elucidated.