Objectives: To compare the effect of a 6‐month community‐based intervention with that of usual care on quality of life, depressive symptoms, anxiety, self‐efficacy, self‐management, and healthcare costs in older adults with type 2 diabetes mellitus (T2 DM ) and 2 or more comorbidities. Design: Multisite, single‐blind, parallel, pragmatic, randomized controlled trial. Setting: Four communities in Ontario, Canada. Participants: Community‐dwelling older adults (≥65) with T2 DM and 2 or more comorbidities randomized into intervention (n = 80) and control (n = 79) groups (N = 159). Intervention: Client‐driven, customized self‐management program with up to 3 in‐home visits from a registered nurse or registered dietitian, a monthly group wellness program, monthly provider team case conferences, and care coordination and system navigation. Measurements: Quality‐of‐life measures included the Physical Component Summary ( PCS , primary outcome) and Mental Component Summary ( MCS , secondary outcome) scores of the Medical Outcomes Study 12‐item Short‐Form Health Survey ( SF ‐12). Other secondary outcome measures were the Generalized Anxiety Disorder Scale, Center for Epidemiologic Studies Depression Scale ( CES ‐D‐10), Summary of Diabetes Self‐Care Activities ( SDSCA ), Self‐Efficacy for Managing Chronic Disease, and healthcare costs. Results: Morbidity burden was high (average of eight comorbidities). Intention‐to‐treat analyses using analysis of covariance showed a group difference favoring the intervention for the MCS (mean difference = 2.68, 95% confidence interval ( CI ) = 0.28–5.09, P = .03), SDSCA (mean difference = 3.79, 95% CI = 1.02–6.56, P = .01), and CES ‐D‐10 (mean difference = −1.45, 95% CI = −0.13 to −2.76, P = .03). No group differences were seen in PCS score, anxiety, self‐efficacy, or total healthcare costs. Conclusion: Participation in a 6‐month community‐based intervention improved quality of life and self‐management and reduced depressive symptoms in older adults with T2 DM and comorbidity without increasing total healthcare costs.