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Diabetes leads to complications in select organ systems primarily by disrupting the vasculature of the target organs. These complications include both micro-(cardiomyopathy, retinopathy, nephropathy, and neuropathy) and macro-(atherosclerosis) angiopathies. Bone marrow angiopathy is also evident in both experimental models of the disease as well as in human diabetes. In addition to vascular disruption, bone loss and increased marrow adiposity have become hallmarks of the diabetic bone phenotype. Emerging evidence now implicates enhanced marrow adipogenesis and changes to cellular makeup of the marrow in a novel mechanistic link between various secondary complications of diabetes. In this review, we explore the mechanisms of enhanced marrow adipogenesis in diabetes and the link between changes to marrow cellular composition, and disruption and depletion of reparative stem cells.