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Background Dementia has been associated with an increased risk of hip fracture. However, little research has been conducted on the impact of dementia on wrist or vertebral fracture development. The aim of this study was to investigate whether dementia is a risk factor for different types of fracture in Taiwan. Methods The study sample was drawn from Taiwan’s National Health Insurance Research Database of reimbursement claims, and comprised 1408 patients who visited ambulatory care centers or were hospitalized with a diagnosis of dementia. The comparison group consisted of 7040 randomly selected individuals. Cox proportional hazard regression model was used to examine associations between dementia and the risk of different types of fracture. Results During a 3-year follow-up period, 264 patients with dementia (18.75%) and 1098 patients without dementia (15.60%) developed fractures. Dementia was independently associated with increased risk of hip fracture [adjusted hazard ratio (HR) 1.92, 95% CI 1.48–2.49]. Patients with dementia and osteoporosis had the highest risk of developing hip fracture (adjusted HR 2.27, 95% CI 1.28–4.01). Dementia did not increase wrist fracture or vertebral fracture risk when compared to the control group, even in patients with osteoporosis. Conclusions Individuals with dementia are at greater risk of developing hip fracture, particularly if they also have osteoporosis. Early mental screening programs and health education should be initiated to decrease disability and dependence in patients with dementia.