We set out to identify empirically-derived health status classes of older adults with diabetes based on clusters of comorbid conditions which are associated with future complications. We conducted a cohort study among 105,786 older (≥65 years of age) adults with type 2 diabetes enrolled in an integrated healthcare delivery system. We used latent class analysis of 19 baseline comorbidities to derive health status classes and then compared incident complication rates (events per 100 person-years) by health status class during 5 years of follow-up. Complications included infections, hyperglycemic events, hypoglycemic events, microvascular events, cardiovascular events, and all-cause mortality. Three health status classes were identified: Class 1 (58% of the cohort) had the lowest prevalence of most baseline comorbidities, Class 2 (22%) had the highest prevalence of obesity, arthritis, and depression, and Class 3 (20%) had the highest prevalence of cardiovascular conditions. The risk for incident complications was highest for Class 3, intermediate for Class 2 and lowest for Class 1. For example, the age, sex and race-adjusted rates for cardiovascular events (per 100 person-years) for Class 3, Class 2 and Class 1 were 6.5, 2.3, and 1.6, respectively; 2.1, 1.2, 0.7 for hypoglycemia; and 8.0, 3.8, and 2.3 for mortality. Three health status classes of older adults with diabetes were identified based on prevalent comorbidities and were associated with marked differences in risk of complications. These health status classes can inform population health management and guide the individualization of diabetes care.