Objective: Declining estrogen levels after menopause result in bone loss and increased fracture risk. This study investigated whether transdermal microdose 17 beta-estradiol (E-2) has efficacy and safety comparable to those of raloxifene, a selective estrogen-receptor modulator approved for the prevention and treatment of postmenopausal osteoporosis. Methods: This study involved a multicenter, randomized, double-blind, active-controlled, noninferiority trial in 500 osteopenic postmenopausal women comparing transdermal microdose E-2 (0.014 mg/d) versus oral raloxifene (60 mg/d), administered for 2 years. Percent change from baseline in bone mineral density at the lumbar spine was measured after 2 years of treatment. Secondary endpoints included proportion of women with no loss of bone mineral density in lumbar spine, change in bone mineral density at hip, biochemical markers of bone turnover, and safety parameters. Results: In the per protocol set, lumbar spine bone mineral density increased by 2.4% (95% Cl, 1.9-2.9) with microdose E-2 versus 3.0% (95% CI, 2.5-3.5) with raloxifene after 2 years; 77.3% of E-2 recipients and 80.5% of those taking raloxifene had no bone loss in the lumbar spine. Both treatments were well tolerated. Most women (99% in the E-2 group and 100% in the raloxifene group) showed no histological evidence of endometrial stimulation after 2 years. Mean dense area in breast mammograms was 19.8% in the E-2 group versus 19.0% in the raloxifene group after 2 years. Conclusions: Transdermal microdose E2 was similarly effective as raloxifene in preventing bone loss at the lumbar spine. Both treatments were well tolerated, with no clinically significant effect on endometrium or breast density.