Previous observational studies suggest higher rates of vestibular dysfunction among patients with type 2 diabetes mellitus (DM) compared with those without diabetes. This study aims to functionally localize vestibular dysfunction in adults with type 2 DM. Prospective cohort study. Tertiary academic medical center. Adults 50 years of age and older with ≥10-year history of type 2 DM were recruited (December 2011-February 2013, n = 25). Vestibular function was assessed by cervical and ocular vestibular-evoked myogenic potentials (VEMPs), testing the saccule and utricle, respectively. Head thrust dynamic visual acuity testing assessed semicircular canal (SCC) function in all canal planes. Results were compared with nondiabetic age-matched controls (n = 25). Subjects were 64.7 ± 7.6 years old, were 40% female, and had a mean hemoglobin A1c of 8.3% ± 1.7%. SCC dysfunction was more common than otoconial organ dysfunction, with 70% of subjects with DM demonstrating impaired performance of at least 1 SCC (ΔlogMAR ≥0.18) and 50% demonstrating otoconial organ impairment (absent ocular VEMP and/or cervical VEMP). Adults with type 2 DM had poorer lateral and superior SCC performance (P < .05) but similar posterior SCC performance compared with controls (P = .16). Both cervical VEMP peak-to-peak amplitude and ocular VEMP n1 amplitude were also decreased with diabetes (P < .01). Adults with type 2 DM have poorer performance on tests of vestibular function related to both SCC and otoconial organ function compared with nondiabetic age-matched adults. Future studies are needed to better understand the relationship between vestibular function and functional disability in persons with diabetes.