Background Vertebral compression fractures associated with osteoporosis reduce daily living activities. The primary risk factor for osteoporotic vertebral fractures (OVCFs) is the severity of osteoporosis, defined as low bone mineral density (BMD) in both peripheral and central regions. In addition to BMD, sarcopenia is also thought to affect OVCFs by reducing paraspinal muscle mass and strength. Objective We aimed to evaluate the association between vertebral compression fractures and paraspinal/psoas muscle characteristics, including muscle mass and fatty degeneration, using quantitative MRI measurements. Methods We retrospectively enrolled 77 patients aged ≥60 years who were diagnosed with acute OVCF between January 2019 and August 2023. The control group consisted of age- and sex-matched patients with osteoporosis (BMD > −2.5) who were followed up without fractures for at least six months. Demographic characteristics, relative total cross-sectional area (rTCSA) and relative functional CSA (rFCSA) of the multifidus (MF), erector spinae (ES), and psoas major (PS) were measured at the L4–5 and L5-S levels on MRI. Results The TCSA and rTCSA of the multifidus (MF) and erector spinae (ES) muscles at both the L4-5 and L5-S1 levels did not show significant differences between the control and OVCF groups. (all p value > 0.05) The mean FCSAL4-5 of the MF 8.97 ± 2.81, ES 16.73 ± 6.49, the mean FCSAL5-1 of the MF 9.43 ± 3.27, ES 10.76 ± 5.79 in the fracture group, while the mean FCSAL4-5 of the MF 11.39 ± 2.6, ES 19.35 ± 4.04, the mean FCSAL5-1 of the MF 13.42 ± 2.56, ES 14.11 ± 4.6 in the non-fracture group. (PMFL4-5 < 0.001, PMFL5-1 < 0.001, PESL4-5 = 0.003, PESL5-1 < 0.001) The mean TCSA of the psoas muscle was significantly higher in the fracture group (17.65 ± 6.21) than in the control group (15.9 ± 4.14) (p = 0.042). Despite the significantly larger total psoas muscle mass in the fracture group, the rFCSA of the psoas muscle was lower in the fracture group (0.81 ± 0.27) compared to the control group (0.89 ± 0.25) (p = 0.046). Conclusions The study shows that the functional muscle mass of the paraspinal muscles is significantly lower in patients with osteoporotic vertebral compression fractures (OVCF) as compared to those without fractures. Quantitative measurement of the functional capacity of the paraspinal muscles using MRI can effectively predict the risk of OVCF and enable early intervention and adopt preventive measures to reduce the incidence of these fractures.