This study examined whether modifiable lifestyle factors, such as body fatness and physical activity, modulate the association between sarcopenia and osteoporosis. In a cross-sectional design, 269 postmenopausal women, aged 65 years and older, underwent dual-energy X-ray absorptiometry (DEXA) scans to measure their body fat percentage, total fat mass, total fat-free mass, appendicular lean mass, bone mineral density (BMD) and bone mineral content. The participants wore a uniaxial accelerometer for seven consecutive days to quantify daily physical activity. The collected data were analyzed using descriptive statistics, Pearson correlation, and a binary logistic regression. Pearson correlation analyses showed that total neck/femur BMD was positively associated with weight-adjusted appendicular skeletal muscle mass (ASM) and objectively-measured physical activities. ASM was positively associated with body fatness. Binary logistic regression analyses showed that the odds ratio (OR) of sarcopenia for osteopenia and/or osteoporosis was substantially attenuated but remained marginally significant when adjusted for age and postmenopausal period (OR = 2.370 and p = 0.050). However, the OR was no longer significant when additionally adjusted for body fatness (OR = 2.218 and p = 0.117) and physical activity (OR = 1.240 and p = 0.448). The findings of the study showed that, in this sample of elderly Korean women, modifiable lifestyle risk factors such as body fatness and physical inactivity played an important role in determining the association between sarcopenia and osteopenia/osteoporosis.