A polymorphism in the gene encoding methylenetetrahydrofolate reductase (MTHFR) has recently been associated with bone mineral density (BMD) in postmenopausal Japanese women. It is not known whether this effect is also present in European populations and whether it is caused by lower peak bone mass or accelerated postmenopausal bone loss. MTHFR genotyping was done in 1748 healthy postmenopausal Danish women participating in a prospective study of risk factors for osteoporosis. At the time of enrollment, 3–24 months after last menstrual period, the less prevalent genotype (TT, 8.7% of the population) was associated with significantly lower BMD at the femoral neck (ANOVA, p < 0.05), total hip (p < 0.01), and spine (p < 0.05 adjusted for lifestyle covariates, p = 0.06 without adjustment). The mean difference was between 0.1 and 0.3 SD, depending on measurement site. MTHFR genotype added significantly to prediction of BMD by weight and age. Fracture incidence was increased more than 2-fold in subjects with the TT genotype (risk ratio [RR], 2.6; 95% CI 1.2–5.6). This remained significant when the Cox analysis was controlled for BMD (RR, 2.4; 95% CI 1.1–5.2). No differences in serum osteocalcin, bone-specific alkaline phosphatase, and 25-OH-vitamin D were found between genotypes. The response to hormone replacement therapy (HRT) did not differ, but the association of the TT genotype with reduced BMD was maintained at the total hip after 5 years of HRT. The MTHFR TT genotype is associated with low BMD and increased fracture incidence in early postmenopausal women.