Among older individuals with type 2 diabetes, those with poor health have greater risk and derive less benefit from tight glycemic control with insulin. To examine whether insulin treatment is used less frequently and discontinued more often among older individuals with poor health compared with those in good health. This longitudinal cohort study included 21 531 individuals with type 2 diabetes followed for up to 4 years starting at age 75 years. Electronic health record data from the Kaiser Permanente Northern California Diabetes Registry was collected to characterize insulin treatment and glycemic control over time. Data were collected from January 1, 2009, through December 31, 2017, and analyzed from February 2, 2018, through June 30, 2019. Health status was defined as good (<2 comorbid conditions or 2 comorbidities but physically active), intermediate (>2 comorbidities or 2 comorbidities and no self-reported weekly exercise), or poor (having end-stage pulmonary, cardiac, or renal disease; diagnosis of dementia; or metastatic cancer). Insulin use prevalence at age 75 years and discontinuation among insulin users over the next 4 years (or 6 months prior to death if <4 years). Of 21 531 patients, 10 396 (48.3%) were women, and the mean (SD) age was 75 (0) years. Nearly one-fifth of 75-year-olds (4076 [18.9%]) used insulin. Prevalence and adjusted risk ratios (aRRs) of insulin use at age 75 years were higher in individuals with poor health (29.4%; aRR, 2.03; 95% CI, 1.87-2.20; P < .01) and intermediate health (27.5%; aRR, 1.85; 95% CI, 1.74-1.97; P < .01) relative to good health (10.5% [reference]). One-third (1335 of 4076 [32.7%]) of insulin users at age 75 years discontinued insulin within 4 years of cohort entry (and at least 6 months prior to death). Likelihood of continued insulin use was higher among individuals in poor health (aRR, 1.47; 95% CI, 1.27-1.67; P < .01) and intermediate health (aRR, 1.16; 95% CI, 1.05-1.30; P < .01) compared with good health (reference). These same prevalence and discontinuation patterns were present in the subset with tight glycemic control (hemoglobin A1c <7.0%). In older individuals with type 2 diabetes, insulin use was most prevalent among those in poor health, whereas subsequent insulin discontinuation after age 75 years was most likely in healthier patients. Changes are needed in current practice to better align with guidelines that recommend reducing treatment intensity as health status declines.