Sclerostin is a potent inhibitor of bone formation but has been shown to correlate positively with areal bone mineral density (aBMD). Little is known about its relationship to parameters of bone strength and volumetric BMD (vBMD) as measured by peripheral quantitative computed tomography (pQCT). We measured both serum sclerostin and parameters of tibial bone size and strength by pQCT to characterize this relationship. Our study population consisted of 223 white and 35 African American women (mean age 87 years) from the Study of Osteoporotic Fractures (SOF) cohort, who had usable pQCT scans of the tibia at sites 4% (T4%), 33% (T33%), and 66% (T66%) from the ankle. Analysis of covariance was used to test for differences in age-adjusted means of aBMD, pQCT variables, and serum biomarkers across sclerostin quartiles. African American women had significantly lower median sclerostin (34.3 pmol/L) than white women (48.5 pmol/L) (p = 0.05). Women in the highest sclerostin quartile had 7% to 14.5% higher hip aBMD and pQCT parameters of vBMD and bone size than those in the lowest quartile in multivariate models adjusting for age, race, weight, height, and diabetes status. The association of sclerostin with parameters of bone strength differed dramatically between T33% and T66% sites. At T66%, women in the highest sclerostin quartile had pQCT strength parameters 9.4% to 15.3% greater than the lowest quartile, whereas no trend was found for the T33% site. Our results suggest paradoxical associations between circulating sclerostin and bone size, density, and strength.