Type 1 diabetes (T1DM) impairs bone formation and fracture healing in humans. Akita mice carry a mutation in one allele of the insulin-2 (Ins2) gene, which leads to pancreatic beta cell dysfunction and hyperglycemia by 5–6 weeks age. We hypothesized that T1DM in Akita mice is associated with decreased bone mass, weaker bones, and impaired fracture healing. Ins2 ± (Akita) and wildtype (WT) males were subjected to femur fracture at 18-weeks age and healing assessed 3–21 days post-fracture. Non-fractured left femurs were assessed for morphology (microCT) and strength (bending or torsion) at 19–21 weeks age. Fractured right femurs were assessed for callus mechanics (torsion), morphology and composition (microCT and histology) and gene expression (qPCR). Both Akita and WT mice gained weight from 3 to 18 weeks age, but Akita mice weighed less starting at 5 weeks (−5.2%, p < 0.05). At 18–20 weeks age Akita mice had reduced serum osteocalcin (−30%), cortical bone area (−16%), and thickness (−17%) compared to WT, as well as reduced cancellous BV/TV (−39%), trabecular thickness (−23%) and vBMD (−31%). Mechanical testing of non-fractured femurs showed decreased structural (stiffness, ultimate load) and material (ultimate stress) properties of Akita bones. At 14 and 21 days post fracture Akita mice had a significantly smaller callus than WT mice (~30%), with less cartilage and bone area. Assessment of torsional strength showed a weaker callus in Akita mice with lower stiffness (−42%), maximum torque (−44%) and work to fracture (−44%). In summary, cortical and cancellous bone mass were reduced in Akita mice, with lower bone mechanical properties. Fracture healing in Akita mice was impaired by T1DM, with a smaller, weaker fracture callus due to decreased cartilage and bone formation. In conclusion, the Akita mouse mimics some of the skeletal features of T1DM in humans, including osteopenia and impaired fracture healing, and may be useful to test interventions.