Individuals with type 2 diabetes mellitus (T2DM) have an increased risk of fragility fracture despite exhibiting normal to high bone mineral density (BMD). Conditions arising from T2DM, such as reduced bone turnover and alterations in microarchitecture, may contribute to skeletal fragility by influencing bone morphology and microdamage accumulation. The objectives of this study were (i) to characterize the effect of T2DM on microdamage quantity and morphology in cancellous bone, and (ii) relate the accumulation of microdamage to the cancellous microarchitecture. Cancellous specimens from the femoral neck were collected during total hip arthroplasty (T2DM:​ n = 22, age = 65 ± 9 years, glycated hemoglobin [HbA1c] = 7.00% ± 0.98%;​ non-diabetic [non-DM]:​ n = 25, age = 61 ± 8 years, HbA1c = 5.50% ± 0.4%), compressed to 3% strain, stained with lead uranyl acetate to isolate microdamage, and scanned with micro–computed tomography (μCT). Individual trabeculae segmentation was used to isolate rod-like and plate-like trabeculae and their orientations with respect to the loading axis. The T2DM group trended toward a greater BV/TV (+27%, p = 0.07) and had a more plate-like trabecular architecture (+8% BV_plates, p = 0.046) versus non-DM specimens. Rods were more damaged relative to their volume compared to plates in the non-DM group (DV_rods/BV_rods versus DV_plates/BV_plates:​ +49%, p < 0.0001), but this difference was absent in T2DM specimens. Longitudinal rods were more damaged in the non-DM group (DV_{longitudinal rods}/BV_{longitudinal rods}:​ +73% non-DM versus T2DM, p = 0.027). Total damage accumulation (DV/BV) and morphology (DS/DV) did not differ in T2DM versus non-DM specimens. These results provide evidence that cancellous microarchitecture does not explain fracture risk in T2DM, pointing to alterations in material matrix properties. In particular, cancellous bone from men with T2DM may have an attenuated ability to mitigate microdamage accumulation through sacrificial rods.