Diuretic-based antihypertensive therapy is associated with the development of diabetes but with improved clinical outcomes. It has been proposed that the duration of clinical trials has been too short to detect the adverse effects of diabetes. We assessed the long-term mortality rate of subjects in the Systolic Hypertension in the Elderly Program (n = 4,732) who were randomized to stepped-care therapy with 12.5 to 25.0 mg/day of chlorthalidone or matching placebo. If blood pressure remained above the goal, atenolol or matching placebo was added. At a mean follow-up of 14.3 years, cardiovascular (CV) mortality rate was significantly lower in the chlorthalidone group (19%) than in the placebo group (22%; adjusted hazard ratio [HR] 0.854, 95% confidence interval [CI] 0.751 to 0.972). Diabetes at baseline (n = 799) was associated with increased CV mortality rate (adjusted HR 1.659, 95% CI 1.413 to 1.949) and total mortality rate (adjusted HR 1.510, 95% CI 1.347 to 1.693). Diabetes that developed during the trial among subjects on placebo (n = 169) was also associated with increased CV adverse outcome (adjusted HR 1.562, 95% CI 1.117 to 2.184) and total mortality rate (adjusted HR 1.348, 95% CI 1.051 to 1.727). However, diabetes that developed among subjects during diuretic therapy (n = 258) did not have significant associations with CV mortality rate (adjusted HR 1.043, 95% CI 0.745 to 1.459) or total mortality rate (adjusted HR 1.151, 95% CI 0.925 to 1.433). Diuretic treatment in subjects who had diabetes was strongly associated with lower long-term CV mortality rate (adjusted HR 0.688, 95% CI 0.526 to 0.848) and total mortality rate (adjusted HR 0.805, 95% CI 0.680 to 0.952). Thus, chlorthalidone-based treatment improved long-term outcomes, especially among subjects who had diabetes. Subjects who had diabetes associated with chlorthalidone had no significant increase in CV events and had a better prognosis than did those who had preexisting diabetes.