Several studies suggested that depression might worsen the clinical outcome of diabetes mellitus; however, such association was confounded by duration of illness and baseline complications. This study aimed to assess whether depression increases the risk of diabetes complications and mortality among incident patients with diabetes.This was a population-based matched cohort study using Taiwan's National Health Insurance Research Database. A total of 38 537 incident patients with diabetes who had depressive disorders and 154 148 incident diabetes patients without depression who were matched by age, sex and cohort entry year were randomly selected. The study endpoint was the development of macrovascular and microvascular complications, all-cause mortality and cause-specific mortality.Among participants, the mean (±SD) age was 52.61 (±12.45) years, and 39.63% were male. The average duration of follow-up for mortality was 5.5 years, ranging from 0 to 14 years. The adjusted hazard ratios were 1.35 (95% confidence interval [CI], 1.32-1.37) for macrovascular complications and 1.08 (95% CI, 1.04-1.12) for all-cause mortality. However, there was no association of depression with microvascular complications, mortality due to cardiovascular diseases or mortality due to diabetes mellitus. The effect of depression on diabetes complications and mortality was more prominent among young adults than among middle-aged and older adults.Depression was associated with macrovascular complications and all-cause mortality in our patient cohort. However, the magnitude of association was less than that in previous studies. Further research should focus on the benefits and risks of treatment for depression on diabetes outcome.