Type 2 diabetes (T2D) has negative effects on skeletal health. A proposed mechanism of diabetic bone disease connects hyperlipidemia to increased bone marrow adiposity and decreased bone quality. Previous research on Type 1 diabetes reported positive associations between serum lipid levels and marrow adiposity, but no data exist for T2D. In addition, marrow adiposity is sex-dependent in healthy populations, but sex has not been addressed adequately in previous reports of marrow adiposity in T2D. The purpose of this study was to quantify associations of marrow adiposity and composition with T2D status, serum lipid levels, and sex. T2D patients and normoglycemic controls (n = 39/37) were included. Single-voxel magnetic resonance spectroscopy (MRS) was performed at the spine and tibia. Quantitative MRS outcomes of marrow adiposity and composition were calculated. Linear regression models were used to compare MRS outcomes among groups and to evaluate associations of MRS outcomes with serum lipid levels. All analyses were performed on sex-stratified subgroups. Total, unsaturated, and saturated fat content at the spine were lower in T2D participants compared to controls in age-adjusted models;​ these differences were significant in men but not in women. In our study cohort, total cholesterol, low-density lipoprotein (LDL), and high-density lipoprotein (HDL) were lower in T2D participants compared to controls. Adjustment for LDL, HDL, and statin use attenuated the association of T2D status with unsaturated fat but not saturated fat in men. Further analysis confirmed significant associations between serum lipid levels and MRS outcomes. Specifically, we found a positive association between LDL cholesterol and total marrow fat in the male T2D group and a negative association between HDL and total marrow fat in the female T2D group. In conclusion, our results suggest that marrow adiposity and composition are associated with lipid levels as well as T2D status, and these relationships are sex-specific.