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The fat and bone connection plays an important role in the pathophysiology of age-related bone loss. This review will focus on the age-induced mechanisms regulating the predominant differentiation of mesenchymal stem cells into adipocytes. Additionally, bone marrow fat will be considered as a diagnostic and therapeutic approach to osteoporosis.There are two types of bone and fat connection. The ‘systemic connection’, usually seen in obese patients, is hormonally regulated and associated with high bone mass and strength. The ‘local connection’ happens inside the bone marrow. Increasing amounts of bone marrow fat affect bone turnover through the inhibition of osteoblast function and survival and the promotion of osteoclast differentiation and activation. This interaction is regulated by paracrine secretion of fatty acids and adipokines. Additionally, bone marrow fat could be quantified using noninvasive methods and could be used as a therapeutic approach due to its capacity to transdifferentiate into bone without affecting other types of fat in the body.The bone and fat connection within the bone marrow constitutes a typical example of lipotoxicity. Additionally, bone marrow fat could be used as a new diagnostic and therapeutic approach for osteoporosis in older persons.