OBJECTIVES: Many older adults with limited life expectancy and/or advanced dementia (LLE/AD) are potentially overtreated for diabetes and may benefit from deintensification. Our aim was to examine the incidence and predictors of diabetes medication deintensification in older Veterans with LLE/AD who were potentially overtreated at admission to Veterans Affairs (VA) nursing homes (community living centers [CLCs]). DESIGN: Retrospective cohort study using linked VA and Medicare clinical/administrative data and Minimum Data Set assessments. SETTING: VA CLCs. PARTICIPANTS: A total of 6960 Veterans with diabetes and LLE/AD admitted to VA CLCs in fiscal years 2009 to 2015 with hemoglobin (Hb)A1c measured within 90 days of admission. MEASUREMENTS: We evaluated treatment deintensification (discontinuation or dose reduction for a consecutive 7‐day period) among residents who were potentially overtreated (HbA1c ≤7.5% and receiving hypoglycemic medications). Competing risk models assessed 90‐day cumulative incidence of deintensification. RESULTS: More than 40% (n = 3056) of Veteran CLC residents with diabetes were potentially overtreated. The cumulative incidence of deintensification at 90 days was 45.5%. Higher baseline HbA1c values were associated with a lower likelihood of deintensification (e.g., HbA1c 7.0‐7.5% vs <6.0%; adjusted risk ratio [aRR] = .57; 95% confidence interval [CI] = .50‐.66). Compared with non‐sulfonylurea oral agents (e.g., metformin), other treatment regimens were more likely to be deintensified (aRR = 1.31‐1.88), except for basal insulin (aRR = .59; 95% CI = .52‐.66). The only resident factor associated with increased likelihood of deintensification was documented end‐of‐life status (aRR = 1.12; 95% CI = 1.01‐1.25). Admission from home/assisted living (aRR = .85; 95% CI = .75‐.96), obesity (aRR = .88; 95% CI = .78‐.99), and peripheral vascular disease (aRR = .90; 95% CI = .81‐.99) were associated with decreased likelihood of deintensification. CONCLUSION: Deintensification of treatment regimens occurred in less than one‐half of potentially overtreated Veterans and was more strongly associated with low HbA1c values and use of medications with high risk for hypoglycemia, rather than other resident characteristics. J Am Geriatr Soc 68:736–745, 2020