Teriparatide (TPTD) is often used for the treatment of patients with severe osteoporosis, but its effectiveness in this patient group has not been specifically studied. Here, we report upon the results of an observational study involving 323 patients with severe osteoporosis (bone density T-score of -4 or less) who were treated at a specialist osteoporosis clinic with TPTD (n = 217) or standard care (n = 106) over a 5.5-year period. The standard care group did not receive TPTD because they declined to self-inject (59.4 %), had a contraindication (7.5 %), or were already stabilized on oral bisphosphonates (33 %). The two groups were matched for the severity of osteoporosis, fracture risk, and most other clinical variables. The annual percentage change in lumbar spine bone mineral density (BMD) was greater in the TPTD group (8.2 ± 6.0 vs. 5.0 ± 8.4, p = 0.002), but there was no difference in response of hip BMD. During follow-up, 3/217 (1.38 %) TPTD-treated patients had new vertebral fractures compared with 7/106 (6.6 %) receiving standard care (p = 0.011), but there was no difference between the groups in the rate of nonvertebral fractures (11.1 vs. 8.5 %, p = 0.47). Logistic regression analysis adjusting for baseline characteristics showed that the risk of vertebral fractures in TPTD-treated patients was significantly reduced compared with standard care (odds ratio = 0.12, 95 % confidence interval 0.03-0.55, p = 0.007). Treatment of severe spinal osteoporosis with TPTD substantially reduces the risk of vertebral fractures compared with standard care and may be the preferred treatment in this patient group.