Evidence on associations between drug-drug interactions (DDIs) and health outcomes in the older community-dwelling population is limited. We estimate potentially clinically important DDI prevalence and examine the association between DDIs and (1) adverse drug events (ADEs), (2) emergency hospital attendance and (3) health-related quality of life (HRQoL) in an older community-dwelling population in Ireland. This is a prospective cohort study of community-dwelling older adults (N = 904) aged ≥ 70 years from 15 general practices in Ireland recruited in 2010 (wave-1) and followed-up over 2 years (wave-2; 2012-2013), with linked national pharmacy claims data. Individuals dispensed two or more drugs (wave-1: N = 842; wave-2: N = 763) were included. DDI prevalence at baseline, follow-up and 6 months prior to each health outcome was estimated. Multi-level regression was used to model the association between DDI-exposure and health outcomes at follow-up. DDI prevalence, adjusted incidence-rate ratios (aIRR), adjusted odds ratios (aOR), β coefficients and robust standard error (RSE) from multi-level regression analyses, and 95% confidence intervals (CIs) are reported. At wave-1, n = 196 (23.3% [95% CI 20.5-26.3]), individuals were potentially exposed to ≥ 1 DDI, increasing to n = 345 (45.2% [41.7-48.9]) at wave-2. At 2-year follow-up, the median number of ADEs was 3 (interquartile range [IQR 2-5]); 229 (30.1%) had ≥ 1 emergency hospital attendance, and the mean EQ-5D was 0.74 (± 0.23). Evidence for the association between DDI-exposure and emergency hospital attendance at follow-up was lacking (aOR = 1.38 [0.42-4.53]). DDI-exposure was associated with an increasing number of ADEs (aIRR = 1.26 [1.03-1.55]), and decreasing EQ-5D utility (β = - 0.07, [-0.11 to -0.04], RSE = 0.02). Aspirin-warfarin, clarithromycin-prednisolone, amiodarone-furosemide, clarithromycin-salbutamol, rosuvastatin-warfarin, amiodarone-bisoprolol, and aspirin-nicorandil were common DDIs 6 months preceding these health outcomes. We found a two-fold increase in DDI prevalence between wave 1 and 2. DDI exposure was associated with increasing ADEs and declining HRQoL at 2-year follow-up. Common DDIs involved anticoagulants, cardiovascular and antimicrobial drugs, which should be targeted for medicine optimisation.