Pioglitazone, a class of thiazolidinedione (TZDs) is a ligands for peroxisome poliferator activated receptor gamma (PPAR). Activation of PPAR receptors negatively regulates bone haemostasis. The present study focuses mainly into two categories firstly generation of functional osteoclasts and second, to study the impact of pioglitazone and estrogen on bone health. whole blood were taken from diabetic and non diabetic postmenopausal women to measures the baseline parameters and for isolation of peripheral blood mononuclear cells (PBMC) and cultured in osteoclasts medium for 14 days into following five groups: PBMCs from non diabetic postmenopausal women, PBMCs from type 2 diabetic postmenopausal women, PBMCs from type 2 diabetic Postmenopausal + Pioglitazone, PBMCs from type 2 diabetic Postmenopausal + Pioglitazone + 17 beta estradiol and PBMCs from type 2 diabetic Postmenopausal + 17 beta estradiol. Mrna expression was analysed for Cathepsin K. Increase in the numbers of TRAP positive multinucleated cells was observed in pioglitazone treated cells of type2 diabetic postmenopausal women (88.12 ± 12.25, p<0.001) as compared to type2 diabetic (46.46 ± 11.54), non diabetic (40.85 ± 9.45) co treated (68.44 ± 15.12, p<0.01) and estrogen treated type 2 diabetic postmenopausal women (39.12 ± 9.11, p <0.0001). In addition the expression ratio of Cathepsin K mRNA was significantly greater in pioglitazone treated type2 diabetic postmenopausal women as compared to other groups (p<0.05). We found that, PPARã agonist pioglitazone induced formation of TRAP positive multinucleated cells and upregulates the expression of bone resorption gene Cathepsin K leading to osteoclastogenesis in type2 diabetic postmenopausal women.