Background: Bariatric surgery improves glycemic control in patients with type 2 diabetes mellitus (T2DM), but less is known about microvascular outcomes. Objective: To investigate the relationship between bariatric surgery and incident microvascular complications of T2DM. Design: Retrospective matched cohort study from 2005 to 2011 with follow-up through September 2015. Setting: 4 integrated health systems in the United States. Participants: Patients aged 19 to 79 years with T2DM who had bariatric surgery (n = 4024) were matched on age, sex, body mass index, hemoglobin A1c level, insulin use, diabetes duration, and intensity of health care use up to 3 nonsurgical participants (n = 11 059). Intervention: Bariatric procedures (76% gastric bypass, 17% sleeve gastrectomy, and 7% adjustable gastric banding) compared with usual care. Measurements: Adjusted Cox regression analysis investigated time to incident microvascular disease, defined as first occurrence of diabetic retinopathy, neuropathy, or nephropathy. Results: Median follow-up was 4.3 years for both surgical and nonsurgical patients. Bariatric surgery was associated with significantly lower risk for incident microvascular disease at 5 years (16.9% for surgical vs. 34.7% for nonsurgical patients; adjusted hazard ratio [HR], 0.41 [95% CI, 0.34 to 0.48]). Bariatric surgery was associated with lower cumulative incidence at 5 years of diabetic neuropathy (7.2% for surgical vs. 21.4% for nonsurgical patients; HR, 0.37 [CI, 0.30 to 0.47]), nephropathy (4.9% for surgical vs. 10.0% for nonsurgical patients; HR, 0.41 [CI, 0.29 to 0.58]), and retinopathy (7.2% for surgical vs. 11.2% for nonsurgical patients; HR, 0.55 [CI, 0.42 to 0.73]). Limitation: Electronic health record databases could misclassify microvascular disease status for some patients. Conclusion: In this large, multicenter study of adults with T2DM, bariatric surgery was associated with lower overall incidence of microvascular disease (including lower risk for neuropathy, nephropathy, and retinopathy) than usual care. Primary Funding Source: National Institute of Diabetes and Digestive and Kidney Diseases.