While bariatric surgery has been shown to improve type 2 diabetes (DM) control in the obese population, the effect on long-term DM complications has been less thoroughly investigated. The purpose of this study was to assess the development of microvascular and macrovascular complications in obese DM patients undergoing bariatric surgery. New York patients' records from the SPARCS database in years 2006-2012 were used to identify obese patients with DM. Patients undergoing bariatric surgery were compared with patients managed medically, matched for age and gender. Patients were grouped based on baseline presence of controlled or uncontrolled DM and followed over time for the development of micro- and macrovascular complications. Cumulative incidence of complications was estimated with death treated as a competing risk event. Multivariable proportional sub-distribution hazards models were used to compare the risk of complications among different patient groups after adjusting for possible confounding factors. A total of 88,981 patients were reviewed, including 15,585 (18%) that were treated with bariatric surgery. Surgery patients had significantly lower risk of microvascular complications compared to non-surgery patients (controlled diabetes: HR = 0.40, 95% CI 0.37-0.42; uncontrolled diabetes: HR = 0.51, 95% CI 0.37-0.71). Similarly, the surgical patients were noted to have a significantly lower risk for macrovascular complications compared to non-surgery patients (controlled diabetes: HR = 0.43, 95% CI 0.40-0.46; uncontrolled diabetes: HR = 0.44, 95% CI 0.28-0.69). Cumulative incidence of microvascular complications was lower at 1, 5 and 9years for the surgical groups for controlled and uncontrolled DM. Similar trends were observed for the macrovascular complications. Bariatric surgery appears to prevent complications of DM. Bariatric surgery patients with DM experienced significantly lower rates of microvascular and macrovascular complications, compared to non-surgically treated comparison group. Bariatric surgery was noted to offer protective benefits for both complicated and non-complicated DM patients. This reduced rate of complications was sustained in the long term.