Type I diabetes is characterized by little or no insulin production and hyperglycemic conditions. It is also associated with significant bone loss and increased bone marrow adiposity. To examine the role of reduced insulin signaling in type I diabetic bone loss without inducing hyperglycemia, we used genetically reconstituted insulin receptor knockout mice (IRKO-L1) that are euglycemic as a result of human insulin receptor transgene expression in the pancreas, liver and brain. RT-PCR analyses demonstrated undetectable levels of insulin receptor expression in IRKO-L1 bone, yet IRKO-L1 bones exhibit similar (and trend toward greater) bone density compared with wild-type animals as determined by micro-computed tomography. Further detailed bone analyses indicated that cortical bone area was increased in tibias of IRKO-L1 mice. Osteoblast markers (osteocalcin and runx2 mRNA levels) and resorption markers (serum PYD levels) were similar in wild-type and IRKO-L1 bones. When marrow adiposity was examined, we noticed a decrease in adipocyte number and aP2 expression in IRKO-L1 mice compared with wild-type mice. Bone marrow stromal cell cultures obtained from wild-type and IRKO-L1 mice demonstrated similar adipogenic and osteogenic potentials, indicating that systemic factors likely contribute to differences in marrow adiposity in vivo. Interestingly, IGF-1 receptor mRNA levels were elevated in IRKO-L1 bones suggesting (in combination with hyperinsulinemic conditions) that increased IGF-1 receptor signaling may contribute to the changes in cortical bone. Taken together, these results suggest that reduced insulin receptor signaling in bone is not a major factor contributing to bone loss in type I diabetes.